OpenAI is reportedly preparing for a new round of financing, with a valuation set at $150 billion. According to sources familiar with the situation, this financing will likely be conducted through convertible notes, hinging on the company’s ability to overhaul its corporate structure and remove investor profit caps.
The specifics of the $6.5 billion funding have not previously been disclosed, illustrating the evolution of OpenAI from a research-based nonprofit into one of the most valuable artificial intelligence startups globally. The changes aim to attract further investment to fund its ambitious pursuit of artificial general intelligence (AGI), which seeks to surpass human intelligence.
Sources indicated that the rapid growth of OpenAI’s revenues has generated strong investor demand for this funding round, which could close within the next two weeks. Existing investors, including Thrive Capital, Khosla Ventures, and Microsoft, are expected to participate, while new investors such as Nvidia and Apple are also considering investments. Sequoia Capital is reportedly in discussions to join as well.
However, if the restructuring efforts fall short, OpenAI may need to renegotiate the valuation at which investors can convert their stakes, which could result in a lower valuation than anticipated, according to anonymous sources familiar with the discussions.
In a statement regarding the financing and potential changes, OpenAI emphasized its commitment to collaborate with its nonprofit board to build AI that benefits everyone. A company spokesperson reiterated that the nonprofit organization remains central to its mission.
The removal of profit limits requires approval from OpenAI’s nonprofit board, which includes CEO Sam Altman, entrepreneur Bret Taylor, and seven other members. Additionally, the company is in talks with legal counsel about transforming its nonprofit structure into a for-profit public benefit corporation, similar to the model adopted by competitors like Anthropic and xAI.
It remains uncertain whether such a fundamental restructuring will take place. The current profit cap limits returns for investors in OpenAI’s for-profit subsidiary, and lifting this restriction could yield greater financial returns for early investors. However, critics may question OpenAI’s governance and its potential departure from its nonprofit mission. OpenAI has stated that the profit cap was established to incentivize research, development, and deployment of AGI in a balanced and sustainable way, rather than focusing solely on profit maximization.
Founded in 2015 and headquartered in San Francisco, OpenAI originally aimed to develop AI technologies that would benefit humanity. It is currently controlled by a nonprofit parent organization. The company has accelerated its commercialization efforts by selling subscription services like ChatGPT to consumers and businesses, amassing over 200 million users.
Currently, existing investors face capped returns on their investments, with any excess profits directed to the nonprofit organization. In its first funding round, the return cap for investors was set at 100 times their initial investment. OpenAI indicated in a 2019 blog post that it expected lower multiples in future funding rounds.
In recent years, OpenAI has raised over $10 billion through this model, with the majority of funding coming from Microsoft. The company was valued at $80 billion in a bidding round last February when it sold existing shares led by Thrive Capital.