ChatGPT Parent OpenAI Seeks To Nearly Triple Valuation To $90B In Share Sale Talks, Report Reveals
The Microsoft Corp.-backed (NASDAQ:MSFT) AI giant OpenAI is exploring a share sale that would peg the firm’s valuation up to $90 billion, roughly tripling since April this year.
What Happened: OpenAI is seeking a valuation of up to $90 billion in a share sale that would triple the fortunes of its existing shareholders in six months, reported The Wall Street Journal.
Earlier in April this year, OpenAI raised $300 million in a new round of funding that included Sequoia Capital, Andreessen Horowitz, Thrive, and others at a $29 billion valuation.
The Sam Altman-led OpenAI is backed by Microsoft, which owns a 49% stake in the company. The Windows maker has invested nearly $13 billion in the Altman-led company, integrating its AI technology in various products, including the Edge browser and Windows.
According to the report, the share sale will allow employees to offload their stakes so that no new shares will be issued. This will also help prevent the dilution of stakes of existing shareholders.
Prior to this, Microsoft announced a major investment in OpenAI in January, weeks after OpenAI debuted its game-changing ChatGPT chatbot. The investment is estimated to be nearly $10 billion.
If OpenAI manages to hit the $90 billion valuation mark, it would be amongst the most valuable startups in the world, only behind Elon Musk’s Tesla Inc. (NASDAQ:TSLA) and TikTok parent ByteDance Ltd.
Why This Matters: OpenAI announced earlier this year that it estimates to hit the $1 billion revenue mark by the end of 2023. This is no mean feat since the company started generating most of its revenue only after the launch of ChatGPT in November 2022.
OpenAI has since then made several improvements to ChatGPT, launching the premium GPT-4 service and adding new capabilities like voice and image support, apart from the ability to access the internet as well.
OpenAI’s progress has also stumped key Microsoft rival Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, which has been working on its own AI technologies for several years now. Google did not have an AI chatbot of its own until recently when it rolled out Bard in a limited beta.
Google is currently working on Gemini, its answer to GPT-4. Meta Platforms Inc. (NASDAQ:META) plans to release Llama 2, its large-language model, later this year.
For now, though, OpenAI is in the driver’s seat, and the Altman-led company is trying to make the most of it.
ChatGPT maker OpenAI to raise funds at a valuation of $80-$90 bn: Report
San Francisco: Sam Altman-run OpenAI is reportedly raising funds at a valuation of $80-$90 billion via sale of existing shares.
According to The Wall Street Journal, the ChatGPT developer is “talking to investors about a share sale” that would value the company between $80 billion to $90 billion, “roughly triple its level earlier this year”.
OpenAI generates revenue in part by charging individuals for access to a powerful version of ChatGPT.
“Employees would be allowed to sell their existing shares rather than the company issuing new ones,” said the report.
In April, OpenAI OpenAI closed a more than $300 million share sale at a valuation of $29 billion.
Altman has “privately suggested OpenAI may try to raise as much as $100 billion in the coming years to achieve its aim of developing artificial general intelligence (AGI)
that is advanced enough to improve its own capabilities”.
Earlier this year, Microsoft invested around $10 billion in the AI startup. The tech giant owns 49 per cent in OpenAI.
Last month, OpenAI said it expected to reach $1 billion in revenue in 2023.
According to media reports, the ChatGPTmaker OpenAI may even go bankrupt by the end of 2024 if it doesn’t get more funding soon.
A recent report by Investopedia claimed that it is too early for any AI leading company, like OpenAI, Anthropic, or Inflection, to head into the initial public offering (IPO) market.
“It is because it takes at least 10 years of operation and $100 million in revenue for an IPO to be successful,” the report said.
–IANS
The post ChatGPT maker OpenAI to raise funds at a valuation of $80-$90 bn:
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