OpenAI Secures $500 Million from SoftBank in Latest Funding Round

OpenAI has secured a significant investment as SoftBank comes on board with a $500 million stake in the AI powerhouse. This investment is part of a larger funding round led by Thrive Capital, with OpenAI aiming to raise a total of $6.5 billion and boasting a current market valuation of $150 billion.

To generate additional capital, OpenAI is undergoing significant transformations to better align with investor interests. The company is currently restructuring to function as a for-profit entity, which marks a substantial shift in its business model. The ongoing valuation is contingent upon OpenAI’s ability to revise its corporate framework, removing previous profit limitations that were in place due to its non-profit structure.

This new organizational model will enable OpenAI to operate without the restrictions imposed by a non-profit board, potentially drawing more investment but also raising concerns regarding accountability and the preservation of public interest.

Key participants in this funding round include Microsoft, an existing major stakeholder in OpenAI, alongside investment firms like Tiger Global Management, Coatue Management, and others. There are active discussions with additional potential investors, including the United Arab Emirates fund MGX and Dragoneer Investment Group. Notably, reports indicate that Apple has opted out of participating in the funding.

OpenAI is also grappling with internal challenges, highlighted by the recent exits of its chief technology officer Mira Murati, Barret Zoph, and Bob McGrew.

Despite these challenges, OpenAI, the world’s most valuable startup, is projected to face around $5 billion in losses this year, even as it generates $3.7 billion in revenue. The company reports a monthly revenue of $300 million, reflecting an astonishing 1,700 percent increase since early 2023, and currently serves over 10 million ChatGPT Plus subscribers.

Looking ahead, OpenAI anticipates its revenue could soar to $11.6 billion next year.

Source: The Information (paywall)

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