OpenAI Completes Deal That Values Company at $157B
OpenAI raised $6.6 billion, boosting its valuation to $157 billion. It projects $3.7 billion in sales but faces $5 billion in losses, amid leadership changes and a required for-profit transition.
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OpenAI has completed a $6.6 billion fundraising deal that has increased its valuation to $157 billion, nearly doubling from $80 billion just nine months ago. The investment round was led by Thrive Capital, with participation from major investors including Microsoft, Nvidia, SoftBank, and the UAE's MGX. OpenAI, which gained prominence with the launch of its chatbot ChatGPT in 2022, is experiencing rapid revenue growth, projecting $3.7 billion in sales for the year. However, the company is also facing significant losses, estimated at $5 billion, due to the high costs associated with developing AI technologies. Despite a cooling investment climate for AI startups, OpenAI's strong market position and user engagement—over 250 million weekly users of ChatGPT—underscore its potential. The company has recently undergone leadership changes, including the brief firing and reinstatement of CEO Sam Altman, and the departure of several key executives. OpenAI is also under pressure to transition to a for-profit model within two years, or risk its funding converting to debt. This restructuring is part of a broader strategy to secure the necessary capital for its ambitious AI projects.
- OpenAI's valuation has risen to $157 billion after a $6.6 billion funding round.
- The company expects $3.7 billion in sales this year but is facing $5 billion in losses.
- OpenAI has over 250 million weekly users of ChatGPT.
- Leadership changes have occurred, including the departure of key executives.
- OpenAI must transition to a for-profit model within two years to avoid funding issues.
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OpenAI's monthly revenue hit $300 million in August, with projected annual sales of $3.7 billion. Despite $5 billion in losses, it seeks $7 billion in investments, valuing it at $150 billion.
OpenAI sees roughly $5B loss this year on $3.7B in revenue
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OpenAI just raised $6.6B to build ever-larger AI models
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31 commentsAnother interesting part:
> Under the terms of the new investment round, OpenAI has two years to transform into a for-profit business or its funding will convert into debt, according to documents reviewed by The Times.
Considering there are already lawsuits ongoing about their non-profit structure, that clause with that timeline seems a bit risky.
All I can say to the investors, with the best of hopes, is:
Good luck! You'll need it!
Talking to friends who are very successful, knowledgeable AI researchers in industry and academia, their big takeaway from o1 is that the scaling hypothesis appears to be nearing its end, and that this is probably the motivation for trading additional training-time compute for additional inference-time compute.
So where does that leave an investor's calculus? Is there evidence OpenAI can pull another rabbit or two out of its hat and also translate that into a profitable business? Seems like a shaky bet right now.
Google's money printing is based on people telling Google what they want in the search bar, and google placing ads about what they want right when they ask for it. Today people type what they want in the ChatGPT search bar.
Like literally some of their best talent tomorrow starts their own company and all they need is data center credits to catch up with open ai itself.
What is the company's moat exactly? Being few months at best ahead of the curve (and only on specific benchmarks)?
Related: Microsoft and NVIDIA's revenues increase by a combined $6.6B.
Look at Google, Meta, etc.
They were super stable in leadership when they took off.
Can’t say the same for OpenAI.
Also, being an AI researcher, them converting to profit org after accepting donations in name of humanity and non-profit is honestly shameful and will not attract most talented researchers.
Similar to what happened to Microsoft once they got labelled as “evil”.
As far as I understand it they're actually underwater on their API and even $20/month pricing, so we'll either see prices aggressively increase and or additional revenue streams like ads or product placement in results.
We've witnessed that every time a company's valuation is impossibly high: They do anything they can to improve outlook in an attempt to meet it. We're currently in the equivalent of Netflix's golden era where the service was great, and they could do no wrong.
Personally I'll happily use it as long as I came, but I know it is a matter of "when" not "if" it all starts to go downhill.
What discount rate do you use on a cash burning non-profit?
There has never been a better time to have human intelligence and apply it to fields that are moving towards making critical decisions based on latent space probability maps.
NLP and Human-Computer Interaction however are fields that have actually been revolutionized though this wave so I do expect at least much better voice interfaces/suggestion engines.
Yeah, that bodes well. Led by Jared Kushner's brother's VC firm with the UAE's sovereign wealth fund and Softbank following. If not for Microsoft and NVIDIA, this would be the ultimate dumb money round.
IMO -- this is not a serious company with serious people building an important long-lived product. This is a group of snake oil salesmen that are in the middle of the greatest grift of their careers. That, and some AI researchers that are probably enjoying limitless gpus.
[1] https://www.timesnownews.com/technology-science/next-gen-cha...
The "no revenue" scene... All OpenAI needs to do is start making some revenue to offset the costs!
But the revenue has flatlined and you can't raise your existing users cost by 20x...
It truly is a mystery as to how anybody throwing other peoples money hopes to get it back from OpenAI
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OpenAI on verge of bankruptcy and heading for $5B in losses: Report
OpenAI faces potential losses of $5 billion in 2024, risking bankruptcy without funding. Despite high costs, analysts believe bankruptcy is unlikely due to support from major investors and ongoing innovations.
Investors pile into OpenAI's $6B funding round in unprecedented bet
OpenAI is raising over $6 billion, valuing the company at $150 billion, with major investors like Thrive Capital, Apple, Nvidia, and Microsoft, despite some firms opting out due to concerns.
OpenAI Is Growing Fast and Burning Through Piles of Money
OpenAI's monthly revenue hit $300 million in August, with projected annual sales of $3.7 billion. Despite $5 billion in losses, it seeks $7 billion in investments, valuing it at $150 billion.
OpenAI sees roughly $5B loss this year on $3.7B in revenue
OpenAI anticipates $5 billion in losses this year despite $3.7 billion in revenue, with projections of $11.6 billion next year. The company is exploring a for-profit restructuring.
OpenAI just raised $6.6B to build ever-larger AI models
OpenAI raised $6.6 billion, valuing the company at $157 billion, to develop advanced AI. Funding depends on restructuring to for-profit status and avoiding support for rival startups.