ChatGPT parent OpenAI raises $122 billion in record funding round, valuation hits $852 billion
OpenAI has closed its largest private financing round, raising $122 billion ahead of its blockbuster initial public offering (IPO) expected to launch by the end of this year.
The deal, which values the ChatGPT maker at $852 billion, aims to support a costly push to produce more chips, build data centers and hire talent as the race for artificial intelligence heats up. The company’s valuation also includes the money raised.
As part of the financing, the AI company has raised more than $3 billion from large investors through banks. OpenAI also said it will be included in several exchange-traded funds (ETFs) managed by ARK Invest, the investment firm led by well-known investor Cathie Wood.
Who were the company’s biggest investors?
Most of the funding, which has been in the works for months, came from three major technology companies. Amazon agreed to invest $50 billion in this round, while Nvidia and SoftBank invested $30 billion.
But the bulk of Amazon’s $35 billion investment will only materialize if OpenAI goes public or artificial general intelligence reaches its technological milestone, according to a report by AFP.
The AI giant has also raised funding from a long list of prominent investors, including Andreessen Horowitz, Abu Dhabi’s MGX, DE Shaw Ventures, TPG and T. Rowe Price.
The AI developer has previously said it plans to spend more than $1.4 trillion on physical infrastructure in the coming years to support 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 cloud and chip vendors like Amazon and Nvidia.
OpenAI’s financial health
OpenAI also said on Tuesday that it now generates $2 billion in monthly revenue. The company, which has attracted wide attention as a product for daily users, also attracts attention among commercial customers.
“OpenAI has become the fastest technology platform to reach 10 million users, the fastest to reach 100 million users, and the fastest to reach 1 billion active users in a short time. At this stage, we are growing revenue four times faster than the companies that defined the Internet and mobile eras, including Alphabet and Meta,” the company said in a blog post.
The company said enterprise sales currently account for 40% of its revenue, and that figure is expected to rise to 50% by the end of this year.
Meanwhile, Amazon’s investment in OpenAI also includes a cloud deal to host and distribute OpenAI models for enterprise customers. According to AFP, this partnership will include a revenue sharing agreement, but exact terms were not disclosed.
OpenAI has also stepped up efforts to increase revenue this year by offering advertising on ChatGPT, an option that CEO Sam Altman previously described as a “last resort.” The company, which relies primarily on subscriptions, said its advertising pilot program generated $100 million in annual revenue in just six weeks.
