OpenAI raises $6.6 billion, hits $157B valuation

OpenAI, the company behind ChatGPT, has raised $6.6 billion in new funding, attracting major investors including Microsoft, Nvidia, Thrive Capital, and Khosla Ventures.

This funding round, which includes contributions from other notable backers like Altimeter Capital, SoftBank, and MGX, Abu Dhabi's state-backed investment firm, could potentially value the company at $157 billion, positioning it as one of the most valuable private companies in the world, states the report. Even though previously rumored, Apple did not participate in this funding round.

The funding comes in the form of convertible notes, meaning the investment will convert to equity if certain conditions are met. One such condition is a restructuring that could change OpenAI from its current nonprofit-controlled model to a fully for-profit company.

Microsoft, OpenAI's biggest corporate backer, remains central to the funding. New players like Nvidia, a leader in AI hardware, also joined in. Thrive Capital, one of the returning investors, committed $1.2 billion, with an option to invest an additional $1 billion next year if OpenAI hits specific revenue targets. 

The closing of this massive funding round coincided with significant internal changes at OpenAI, including the unexpected departure of longtime Chief Technology Officer Mira Murati. Despite these changes, investor enthusiasm remains high, with many confident in the company's continued growth. OpenAI CEO Sam Altman projects a significant leap in revenue, estimating that the company could make $11.6 billion next year, up from $3.6 billion in 2024. 

However, while OpenAI's revenue is rising, it faces substantial losses—currently over $5 billion this year. To accommodate its employees, OpenAI plans to offer liquidity through a tender offer, enabling workers to sell some of their shares. This follows a similar move earlier this year when some employees were allowed to cash out shares based on a company valuation of $86 billion.