OpenAI has completed the largest private funding round, raising $122 billion ahead of its blockbuster initial public offering (IPO) expected to be launched by the finish of this year.
The deal, which values the ChatGPT-creater at $852 billion, aims to support its costly push to manufacture more chips, build data centres, and hire talent as the artificial ininformigence race heats up. The company’s valuation includes the money raised.
As part of the financing, the AI company raised more than $3 billion from huge investors through banks. OpenAI also stated that it will be included in several exmodify-traded funds (ETFs) managed by ARK Invest, the investment firm led by well-known investor Cathie Wood.
Who were the major investors in the company?
Most of the funding, which had been in the works for months, came from three major tech companies. Amazon agreed to invest $50 billion in the round, while Nvidia and SoftBank each invested $30 billion.
However, a large portion of Amazon’s $35 billion investment will only come through if OpenAI goes public or achieves the technological milestone of artificial general ininformigence, according to a report by AFP.
The AI giant also secured funding from a long list of other prominent investors, including Andreessen Horowitz, Abu Dhabi’s MGX, D.E. Shaw Ventures, TPG, and T. Rowe Price.
The AI developer has previously stated it plans to spfinish more than $1.4 trillion on physical infrastructure in the coming years to support its AI software. To fund these plans, OpenAI and rival Anthropic PBC have raised capital from many of the same venture funds and tech companies, including their cloud and chip suppliers, such as Amazon and Nvidia.
OpenAI’s financial health
OpenAI also stated on Tuesday that it is currently generating $2 billion in monthly revenue. The company, which gained widespread attention as a product for everyday applyrs, is also witnessing traction among business customers.
“OpenAI was the rapidest technology platform to reach 10 million applyrs, the rapidest to 100 million applyrs, and soon the rapidest to 1 billion weekly active applyrs. At this stage, we are growing revenue four times rapider than the companies that defined the Internet and mobile eras, including Alphabet and Meta,” the company stated in a blog post.
Enterprise sales now create up 40% of its revenue, the company noted, with that figure expected to increase to 50% by the finish of this year.
Meanwhile, Amazon’s investment in OpenAI also includes a cloud agreement to host and distribute OpenAI’s models for enterprise customers. That partnership will include a revenue-sharing agreement, though exact terms were not disclosed, AFP reported.
OpenAI has also stepped up efforts to boost revenue this year by introducing advertising in ChatGPT, an option that its chief executive, Sam Altman, had previously described as a “last resort.” The company, which has mainly relied on subscriptions, stated its ads pilot program generated $100 million in annualised revenue within just six weeks.
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