Tuesday, February 27, 2024

Open AI begins discussions to raise new funding at $100 billion valuation

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Artificial intelligence research firm Open AI is in early discussions to raise $100 billion or more, based on the company's new valuation.Bloomberg“The deal will strengthen the position of the company that built the ChatGPT project as one of the world's most valuable startups,” said people familiar with the matter.

Potential investors in the fundraising round were included in initial discussions, requesting anonymity to discuss private matters.

Details such as terms, valuation and timing of the funding round are yet to be finalized and are likely to change, sources said.

If the funding round goes as planned, it would make the artificial intelligence company the most valuable startup in the United States, after billionaire Elon Musk's Space Exploration Technologies Corp., according to financial data analytics firm CPI Insights.

Open AI declined to comment.

The company is scheduled to complete a separate tender offer in early January that would allow employees to sell $86 billion worth of stock, Bloomberg previously reported. It is led by US capital management firm Thrive Capital and has received more demand from investors than it can provide, according to people familiar with the matter.

OpenAI's skyrocketing valuation reflects the artificial intelligence craze the company started a year ago, after launching ChatGPT, a chat program capable of producing human sentences and even poems in response to simple prompts.

A very important emerging company

It has so far raised $13 billion from Microsoft, making it the most prominent startup in Silicon Valley.

Since then, Google's owner Amazon and Alphabet have poured billions into Open AI rival Anthropic. Salesforce Inc. invested $4.5 billion in Hugging Face.

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Nvidia Corp, which makes many of the semiconductors that power artificial intelligence, said earlier this month that it had made more than two dozen investments in 2023.

Open AI is in talks with Abu Dhabi-based artificial intelligence company G42 to raise funds for the new chip project, according to people familiar with the matter.

The startup has discussed raising $8 billion to $10 billion from G42, said one of the sources, all of whom requested anonymity to discuss confidential information. It's unclear whether the chip plans and the company's broader financial initiatives are related.

Sam Altman, CEO of OpenAI, sought capital for a chipmaking project codenamed Tigris. Bloomberg reported last month that the goal is to make semiconductors that can compete with Nvidia, which currently dominates the artificial intelligence chip market.

In October, G42 announced a partnership with Open AI with the aim of “providing cutting-edge AI solutions to the UAE and regional markets”. No financial details were disclosed.

OpenAI's future was briefly uncertain after its board of directors abruptly fired Altman last month. At the time, some investors considered reducing their holdings to zero. But after five days of leadership turmoil, Altman was reinstated and a new board appointed. The company aims to signal to customers that it is refocusing on its products after the turmoil.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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