OpenAI ‘s record funding round comes with strings attached

Company nearly doubles its valuation but there is an option for investors to withdraw

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Money continues to flow for OpenAI – for now

OpenAI has successfully raised $6.6 billion in its latest funding round, propelling its valuation to £157 billion, but the terms had some catches for both OpenAI and its backers.

The firm behind ChatGPT has boosted its valuation to almost twice its previous figure of £86 billion.

According to the Wall Street Journal, the significant influx of capital comes with conditions: investors are granted the option to withdraw their funding if OpenAI fails to fulfil its intention of converting from a nonprofit, with a for-profit division, to a fully for-profit entity.

The funding round also included a controversial stipulation that investors agreed not to also fund five specific companies including Perplexity, Glean, Anthropic, Safe Superintelligence (led by OpenAI co-founder Ilya Sutskever), and xAI,

Those who agreed to such terms include Thrive Capital which led the funding round with its investment of £1.25bn. Microsoft, a long-standing supporter of OpenAI, contributed nearly £1 billion, and has now invested a total of £13 billion in the company. New players in the funding round include Sofnk, which put in £500 million, and Nvidia, with an investment of £100 million.

Additionally, MGX, a company based in the United Arab Emirates, has also joined the funding spree. MGX recently became involved in AI initiatives, including a partnership on AI infrastructure led by Microsoft.

Interestingly, Apple was reportedly in discussions to invest but ultimately chose not to participate. The Wall Street Journa l indicated that a minimum investment of £250 million was required to access OpenAI's financial documents. This funding round was notably organised by OpenAI’s recently appointed chief financial officer, Sarah Friar, who was hired in June.

As OpenAI’s valuation escalates to levels comparable with established public companies such as Goldman Sachs, Uber, and AT&T, the firm faces mounting competition. Rivals like Anthropic, Meta, and Google are releasing AI models that rival OpenAI’s capabilities.

OpenAI's expansion is reflected in its rapidly growing user base. ChatGPT boasts around 250 million weekly active users, with 11 million paying subscribers and approximately 1 million businesses utilising its services. This growth positions ChatGPT as one of the fastest-growing technologies in history.

OpenAI’s drive to become more profitable, grow its enterprise business and throw everything at AGI development has combined with CEO Sam Altman’s ability to generate media attention to create tensions within the company, evident in the steady flow of high-level exits from the business this year. The most recent of these was CTO Mira Murati, who left the company last month.