OpenAI has closed a historic $6.6 billion funding round, marking the largest venture capital investment in history.
https://twitter.com/DivesTech/status/1842131600294772869
The AI research and deployment company is now valued at $157 billion post-money, bringing its total funds raised to $17.9 billion. The round was led by Thrive Capital, with participation from major investors such as Nvidia, Microsoft, SoftBank, and Cathie Wood’s Ark Invest.
OpenAI got its record VC haul. Now it's time to prep for an IPO https://t.co/UkMSz6720v
— Dan Primack (@danprimack) October 3, 2024
Nvidia invested $100 million, while Ark Venture Fund contributed $250 million, SoftBank put in $500 million, and Thrive Capital led with $1.25 billion. Altimeter Capital and Khosla Ventures also joined the funding round. OpenAI, founded in 2015 by Sam Altman, Peter Thiel, and Elon Musk, initially aimed to raise $1 billion through donations as a not-for-profit research organization.
However, in 2019, the company created a new for-profit subsidiary to attract investors. This shift required approval from the board overseeing OpenAI’s nonprofit arm.
"OpenAI has asked investors to avoid backing rival start-ups such as Anthropic and Elon Musk’s xAI, as it seeks to shut out challengers to its early lead in generative artificial intelligence."
An open call to avoid common ownership in VC!https://t.co/jCAYi7kjDQ
— Florian Ederer (@florianederer) October 4, 2024
The latest investment involves convertible notes, which will turn into equity once OpenAI establishes a “public benefit corporation.” This structure allows the company to generate profit while maintaining its social mission.
If the transition does not proceed, investors will be entitled to their money back.
A four billion dollar unsecured line of credit.
With so much money washing around, how does one stay hungry and lean and focused?https://t.co/EVhF0D3Clt
— Grady Booch (@Grady_Booch) October 3, 2024
Historic $6.6 billion funding round
OpenAI’s popular ChatGPT has approximately 350 million monthly active users, with a small fraction paying $20 per month for additional features.
The startup also licenses its AI models, like GPT-4, to developers, generating revenue through these fees. OpenAI is projected to generate $3.7 billion in revenue for 2024 and expects a dramatic increase to $11.6 billion by 2025. Long-term forecasts predict its revenue could top $100 billion per year by 2029.
Currently, regular investors cannot buy shares in OpenAI, as it remains a private company. Exposure to OpenAI’s success could be gained indirectly through investments in its major backers like Nvidia or Microsoft. However, stakeholders anticipate that the next logical step for OpenAI could be an IPO, allowing broader investor participation in its future growth.
OpenAI’s historic funding round highlights the rapid advancements and growing interest in the AI sector. As the company continues to develop groundbreaking AI models and applications, its impact on various industries is expected to be significant. Investors and industry observers will be closely watching OpenAI’s progress and the potential for a future IPO.
Feeling stuck in self-doubt?
Stop trying to fix yourself and start embracing who you are. Join the free 7-day self-discovery challenge and learn how to transform negative emotions into personal growth.
