OpenAI has slashed the target for its latest funding round by $10bn as it struggles to close a deal overshadowed by an AI sell-off in public markets and the imminent public listing of its rival Anthropic.
The ChatGPT maker had aimed to raise $30bn at a $1.4tn valuation last month, billing the deal as a final chance for investors to buy in ahead of its own initial public offering next year. OpenAI pointed to rapid revenue growth since July to justify nearly doubling its price tag from $852bn. However, it has since tempered its ambitions amid a brutal sell-off in tech stocks and growing anxiety about the pace and extent of AI spending. The tech-heavy Nasdaq 100 fell 3.5 per cent on Friday.
OpenAI is now seeking about $20bn at a $1.25tn valuation, according to people with knowledge of the matter. A "first close" is expected to bring in less than $20bn, after some investors lowered their allocations. A consortium of investment groups from the United Arab Emirates, including state-backed tech fund MGX, is expected to be the largest participant, and as part of the deal OpenAI will have an option to lease newly developed computing power in the region. Venture capital firms including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz, as well as SoftBank led by Masayoshi Son, also plan to participate. A subsequent retail offering could expand the round to around $20bn.
OpenAI raised $122bn in March this year but plans to spend multiples of that on computing power to train and run its models. One backer said the fundraising process had begun amid enthusiasm for the AI trade but was caught out by a sharp reversal in the market. OpenAI is also competing for attention with Anthropic, which is set to go public next month at a valuation of $1.5tn or more.
OpenAI, Sequoia, Founders Fund and SoftBank declined to comment. MGX, Coatue and Andreessen Horowitz did not immediately respond to requests for comment.
Source: Financial Times Companies · Summarized by HeadlinesBriefing