OpenAI Is Gearing Up for Another Investment Round That Aims to Turn It Into a $100 Billion Startup

  • The venture capital fund Thrive Capital and Microsoft are among the key players in this upcoming funding round.

  • If the funding round is successful, OpenAI will be on par with companies like Nike, AT&T, and Intel.

August 29, 2024, 05:13 ET

Javier Pastor

Senior Writer

Computer scientist turned tech journalist. I've written about almost everything related to technology, but I specialize in hardware, operating systems and cryptocurrencies. I like writing about tech so much that I do it both for Xataka and Incognitosis, my personal blog. LinkedIn

OpenAI is seeking additional funding. Microsoft’s multi-billion dollar investment earlier this year has allowed the company to expand and advance its AI models. However, according to The Wall Street Journal, it’s now seeking new funding through an investment round that will significantly increase the company’s estimated valuation.

The $100 billion startup. As reported in The New York Times, this investment round will raise the company’s valuation to $100 billion. This is a remarkable figure, especially when compared to Nike’s market capitalization of $124.13 billion, AT&T’s $124.76 billion, and Intel’s $135.5 billion.

Notable investor. Leaked data suggests that Thrive Capital, a venture capital firm, will lead the round with a $1 billion investment. Microsoft is also one of the potential participants in this new fundraising process, which has been in the works for months.

Steady valuation growth. Thrive Capital was a key player in the previous investment round in February 2024, which raised OpenAI’s valuation to $80 billion. Experts now predict that the valuation will increase by another $20 billion.

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The cost of advancing AI is quite high. According to Bloomberg, an internal OpenAI statement confirmed that the company will use the funds to cover operating expenses and to expand the computing power needed for developing its future AI models.

The company’s revenue remains modest. The investment rounds and the company’s valuation are surprisingly high, especially considering that OpenAI’s current annual revenue is around $3.5 billion, which is considerably low relative to its theoretical size.

Unsustainable? According to some analysts, like Ed Zitron, “OpenAI will have to raise more money than has ever been raised to survive, and on top of that, they will have to raise at a higher valuation than any privately-held company ever has.” Zitron has estimated that OpenAI spends around $5 billion a year and needs to raise at least $3 billion to survive.

Image | Focal Foto (via Flickr)

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