OpenAI secures $6.6 billion funding with investment from Microsoft and Nvidia, valuation soars to $157 billion

OpenAI, the creator of ChatGPT, has raised a massive $6.6 billion in funding, propelling its valuation to an estimated $157 billion. This latest investment solidifies OpenAI's position as one of the world's most valuable private companies and reflects the immense investor confidence in its potential within the rapidly growing AI market.

Major Investors Back OpenAI's Growth

The funding round attracted participation from both existing and new investors:

Returning Investors: Thrive Capital, Khosla Ventures, and Microsoft.

New Investor: Nvidia.

Other Participants: Altimeter Capital, Fidelity, SoftBank, and MGX (Abu Dhabi's state-backed investment firm).

Employee Liquidity and Sweetheart Deal for Thrive Capital:

Following the funding, OpenAI plans to offer employees the opportunity to sell their shares through a tender offer, although specific details and timing are yet to be determined. Earlier this year, some employees cashed out their shares at an $86 billion valuation.

Thrive Capital, which committed approximately $1.2 billion to the round, has secured an option to invest an additional $1 billion next year at the same valuation if OpenAI achieves certain revenue targets.

Despite initial talks, Apple did not participate in the funding round, according to Reuters.

Restructuring and Executive Changes

The funding coincides with OpenAI's ongoing restructuring efforts, aiming to transition from a non-profit to a for-profit structure to attract greater investment and remove limitations on investor returns. The company has also faced recent executive departures, including the sudden resignation of CTO Mira Murati last week.

Ambitious Revenue Projections and Investor Protections

OpenAI projects a substantial revenue increase to $11.6 billion next year, up from an estimated $3.6 billion this year, despite anticipating losses exceeding $5 billion in 2024. Investors have negotiated safeguards to protect their investments during the restructuring process, including the option to reclaim their capital or renegotiate the valuation if the changes are not implemented within two years.

OpenAI's flagship product, ChatGPT, has amassed 250 million weekly active users since its launch, driving significant revenue growth. Despite its commercial success, OpenAI remains committed to pursuing artificial general intelligence (AGI), the development of AI systems that surpass human capabilities.