OpenAI in talks to raise new funding at valuation of $132 billion or more

New York - OpenAI is in early discussions to raise a fresh round of funding at a valuation at or above US$100 billion (S$132 billion), people with knowledge of the matter said, a deal that would cement the ChatGPT maker as one of the world’s most valuable start-ups.

Investors potentially involved in

the fund-raising round

have been included in preliminary discussions, according to the people. Details like the terms, valuation and timing of the funding round have not yet been finalised and could still change, the people said.

If the funding round happens as planned, it would make the artificial intelligence (AI) darling the second-most valuable start-up in the United States, behind only Mr Elon Musk’s SpaceX, according to data from CBInsights. 

OpenAI declined to comment. 

The company is set to complete a separate tender offer in early January, which would allow employees to sell their shares at a valuation of US$86 billion. That is being led by Thrive Capital and saw more demand from investors than there was availability, sources have said.

OpenAI’s rocketing valuation mirrors the AI frenzy it kicked off one year ago after releasing ChatGPT, a chatbot capable of composing eerily human sentences and even poetry in response to simple prompts. The company became Silicon Valley’s hottest start-up, raising US$13 billion to date from Microsoft, and spurred a new appreciation for the promise of AI that changed the tech industry landscape within a few months. 

Amazon.com and Alphabet have since poured billions into OpenAI-rival Anthropic. Salesforce led an investment into Hugging Face that valued it at US$4.5 billion, and Nvidia, which makes many of the semiconductors that power AI tasks, said earlier in December that it made more than two dozen investments in 2023. 

OpenAI has also held discussions to raise funding for a new chip venture with Abu Dhabi-based G42, according to people with knowledge of the matter. 

The start-up has discussed raising between US$8 billion and US$10 billion from G42, said one of the people, all of whom requested anonymity to discuss confidential information. It is unclear whether the chips venture and wider company funding efforts are related.

OpenAI chief executive officer Sam Altman had been seeking capital for the chipmaking project, code-named Tigris. The goal is to produce semiconductors that can compete with those from Nvidia, which currently dominates the AI chip market, Bloomberg News reported in November.

In October, G42 announced a partnership with OpenAI “to deliver cutting-edge AI solutions to the UAE and regional markets”. No financial details were provided. The firm, founded in 2018, is led by Sheikh Tahnoon bin Zayed Al Nahyan, the United Arab Emirates’ national security adviser and chair of the Abu Dhabi Investment Authority.

OpenAI’s future looked briefly uncertain after its board suddenly fired Mr Altman earlier in November. At the time, some investors considered writing their stakes down to zero. But after five days of leadership tumult, Mr Altman was brought back and a new board was named. The company has aimed to signal to customers that it is refocusing on its products following the upheaval. BLOOMBERG