NewsUC&C2 Jan 2024 · 3 min read

OpenAI Reportedly in Talks for New Funding Valued at $100 Billion

Why it matters: OpenAI’s $100bn funding talks could reshape Microsoft-backed GPT and ChatGPT investment, while its G42 chip project and Thrive Capital deal prog

Kieran Devlin

OpenAI is reportedly in discussions for a new round of funding valued at $100 billion or higher.

As first reported by Bloomberg, which cited sources close to the matter, the terms, valuation, and timing for the funding round are yet to be finalised, and they remain subject to potential adjustments.

OpenAI is also set to complete a further agreement with its second-largest investor, Thrive Capital, which the report indicates would allow OpenAI employees to sell shares valued at $86 billion. OpenAI previously enacted a $300 million share sale valued at $30 billion.

Microsoft is currently OpenAI's most prominent investor, having put roughly $13 billion into the company since 2019 and having integrated its GPT LLMs across several of its products.

The Bloomberg report suggested that OpenAI has also had talks with UAE-based AI company G42 about raising funding for a new AI chip project, with estimations between valuations of $8 billion and $10 billion. However, the report emphasised that it was unclear whether funding around the chip venture and company-wide investment were related.

2023 Was Seismic For OpenAI

While ChatGPT launched in 2022, it crashed headfirst into the zeitgeist last year as word of mouth and international news stories about AI's potential saw its generative AI chatbot reach 180.5 million weekly active users by the end of 2023.

Even controversies around its producing hallucinations — outdated or outright inaccurate information in replies to prompts — and its indiscriminate handling of sensitive data for training its AI models couldn't stem OpenAI and ChatGPT's momentum.

OpenAI became even more of a global story when, in November, a saga worthy of a Netflix miniseries unfolded.

To recap as concisely as possible, CEO Sam Altman was ousted as OpenAI CEO by its board on Friday, November 17. Following an indignant response from OpenAI investors and employees, Altman and the board discussed a potential return over the following weekend before discussions broke down. Microsoft then released a statement saying it had hired Altman and Brockman to manage an advanced AI research team overnight on Sunday, but this turned out to be premature.

The following Monday, a letter signed by over 700 of OpenAI’s 770 employees demanded the board’s resignations and Altman’s return; otherwise, they would leave themselves to follow Altman to Microsoft. On Tuesday night Pacific Time, Altman was reinstated, the previous board was removed, and a new interim one was put into place to oversee the hiring of the next permanent group.

However, this melodrama prompted the UK’s Competition and Markets Authority (CMA) to initiate a probe into Microsoft and OpenAI’s relationship, especially with Microsoft CEO Satya Nadella publicly highlighting the need for improved governance of OpenAI, as well as the Seattle-based tech giant subsequently securing a nonvoting position on OpenAI's new board.

The CMA offered an Invitation to Comment to both tech companies, which is the first part of the CMA’s information-gathering initial review and is delivered before the launch of an official phase one investigation. The regulatory body asked Microsoft, OpenAI, and any other relevant third party whether “recent developments” saw the partnership expand into a “relevant merger situation”.

As a result of these developments and the manner in which they unfolded, the CMA says it will “review whether the partnership has resulted in an acquisition of control”.

Meanwhile, OpenAI’s Chief Operating Officer Brad Lightcap also warned against expecting too much, too soon, from AI’s ability to transform businesses.

In an interview with CNBC last year, Lightcap was asked about what he considered the most “overhyped” aspect of AI in 2023. He replied that many businesses (perhaps naively) expect AI in its current form to help them cut costs, address significant structural issues or reverse negative growth trends.

“I think the overhyped aspect is that it, in one fell swoop, can deliver substantive business change,” Lightcap said. Lightcap clarified that AI is still in its “infancy” and in a relatively experimental stage of development, so no concrete expectations of its impact as part of business tools or applications should be set.

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