OpenAI is not going to reduce its influence in the market of generative artificial intelligence systems, and for this purpose it intends to hold a new round of investment. The company’s appetite is not small – it plans to attract several billion dollars. As The Wall Street Journal notes, the next round of investments should value OpenAI’s capitalization at more than $100 billion.
According to the source, new financial injections into OpenAI’s capital will be provided by the Thrive Capital venture fund and Microsoft, which remains a shareholder in the startup. The former will invest about $1 billion, while the amount of investment from Microsoft is not specified. In January 2023, Microsoft invested about $10 billion in OpenAI. The previous stage of OpenAI’s business valuation occurred at the end of last year, when employees sold its shares to third-party investors. Then the company’s capitalization was estimated at $86 billion.
If we talk about Thrive Capital, then since last year this fund has already invested several hundred million US dollars in OpenAI’s capital. It is generally accepted that the fund’s management has a trusting relationship with OpenAI CEO Sam Altman.
Competitive Landscape and Future Development
It is not specified who else will participate in the new round of investments. Competition in the artificial intelligence segment is growing, with many industry giants either independently developing core competencies or investing in sponsored startups. For Microsoft, formally, this is OpenAI. According to The Wall Street Journal, some OpenAI shareholders recently negotiated with investors about selling their shares in the company at a price that would correspond to a capitalization level of $103 billion. Accordingly, the business valuation is unlikely to be lower during new negotiations.
OpenAI will use the funds received from investors for its development. The creation of the large language model GPT-4 required it to spend $100 million. Work is already underway on a new model, which will certainly be more expensive to develop. For now, the AI sphere for most investors implies active expenses, but the financial return is minimal in the short term. OpenAI itself reached $3.4 billion in annual revenue this year.
Since 2019, Microsoft has invested about $13 billion in the capital of the OpenAI subsidiary, which is responsible for the commercial component of the business, notes NIXSOLUTIONS. This allows the software giant to claim 49% of the profits of this structure. Both companies are considered formal competitors for each other; they do not limit themselves in choosing alternative partners for the development of a wide range of initiatives.
We’ll keep you updated on any new developments in OpenAI’s funding efforts and their impact on the AI market.