More cash required. Latest funding talks with investors reportedly values AI startup OpenAI at $150 billion
Additional funding for OpenAI is back in the news headlines, with a new report suggesting a huge increase in market value for the AI pioneer.
Bloomberg (citing people familiar with the situation), reported that OpenAI is currently in talks with investors to raise $6.5 billion in equity financing, while banks are apparently negotiating to extend a $5 billion credit line to the firm.
This $6.5 billion fundraising for OpenAI is set to push the firm’s value to an impressive $150 billion.
OpenAI fundraising
This $150 billion valuation is a notable increase from the suggested $100 billion valuation in late August, when both Apple and Nvidia were said to be in talks to invest in a new OpenAI fundraising round led by investment firm Thrive Capital.
This $150 billion value is also a 74 percent increase from the $86 billion valuation from the company’s tender offer earlier this year.
According to Bloomberg, the new valuation figure that doesn’t include the money being raised, and it will fortify OpenAI’s status as one of the biggest startups in the world.
The latest capital injection will apparently allow OpenAI to stay private for longer. It comes as many startups are said to be avoiding a public listing due to the regulatory costs and the volatility of stock markets.
OpenAI is already consuming huge amounts of funding.
Microsoft is one of the largest financial backers of OpenAI, and is thought to have invested up to $13 billion in the AI firm, with Redmond last pumping billions of dollars into OpenAI in January 2023.
OpenAI also heavily depends on Microsoft’s Azure cloud infrastructure for its costly computing infrastructure.
Observer seats
Microsoft had occupied an observer role on OpenAI’s board during most of 2024, and as a result of Apple’s June ‘Apple Intelligence’ announcement, it had been expected that Apple fellow Phil Schiller would also be given an observer role on OpenAI’s board.
Image credit Apple
Microsoft had occupied an observer position on OpenAI’s board ever since Microsoft made clear its displeasure with the previous not-for-profit board, which in November 2023 had unexpectedly fired CEO Sam Altman (who was rehired days later).
However Microsoft in July gave up its seat as an observer on the board at OpenAI, while Apple at the same time also did not take up a similar position on the board.
Instead OpenAI said it would host regular meetings with partners such as Microsoft and Apple and investors Thrive Capital and Khosla Ventures – as part of “a new approach to informing and engaging key strategic partners” under Sarah Friar, the former Nextdoor boss who was recently hired as OpenAI’s first chief financial officer.
The Microsoft retreat from governance oversight of OpenAI’s board of directors came after antitrust authorities in both the EU and US examined the partnership between Microsoft and OpenAI, amid broader concerns about competition in the rapidly growing AI sector.