After Historic Funding Round, OpenAI Still Needs More Money. It Plans to Borrow up to $4 Billion

The artificial intelligence industry is expensive to lead. Just look at OpenAI. The AI startup recently completed a huge round of funding, which Bloomberg described as one of the largest private investments in recent times.

A day after reaching the milestone, OpenAI announced the formalization of a $4 billion credit facility. In a blog post, the company said, “This means we now have access to over $10 billion in liquidity.” The funds will come from nearly a dozen U.S. financial institutions.

OpenAI Needs Money, Lots of Money

This isn’t a typical loan but rather a “revolving” line of credit that remains open even as payments are made, enabling the company to access funds as needed. Although the banks have approved this financing tool, they haven’t yet disbursed the funds.

Specifically, the banks include JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC–nearly a dozen major financial institutions that will help bolster OpenAI’s financial position. This effort is in addition to the $6.6 billion investment round announced on Wednesday.

The company said the funds will be used to “invest in new initiatives” and operate with greater agility as it grows. Although OpenAI didn’t disclose many details, it mentioned that the funds will drive more research and the development of “products that bring AI to the world.” Additionally, it’ll use some of the money to expand the company’s infrastructure and hire new talent.

At this point, it’s no secret that the development of AI comes with significant costs. The data centers where language models are created require expensive graphics processing units, like Nvidia H100s, and consume a lot of electrical power, making them expensive to operate.

OpenAI has been using Microsoft’s Azure AI cloud infrastructure to train and run its models, but the company seems to be planning to expand its infrastructure. The details of this expansion aren’t clear yet, but OpenAI is expected to reveal more information over time.

It’s important to note that OpenAI is facing increasing competition. It’s no longer the dominant force it once was after the release of ChatGPT in 2022. Tech giants like Google, Amazon, and Microsoft (OpenAI’s partner) are also investing heavily in AI, while companies like Anthropic and Mistral AI look very promising.

Image | OpenAI | Alexander Grey

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