OpenAI secures $6.6bn investment from UAE’s MGX, Nvidia

OpenAI, the company behind ChatGPT, has raised $6.6bn from investors, which could value the company at $157bn and cement its position as one of the most valuable private companies in the world.

The funding has attracted returning venture capital investors, including Thrive Capital and Khosla Ventures, OpenAI’s biggest corporate backer, Microsoft and new participation from Nvidia.

The closing of the funds coincides with the company’s ongoing restructuring efforts and executive changes, including the abrupt departure of its longtime chief technology officer, Mira Murati.

Altimeter Capital, Fidelity, SoftBank and Abu Dhabi’s state-backed investment firm MGX also participated in the round.

OpenAI chief financial officer Sarah Friar told employees on Wednesday that the company will be able to provide liquidity for them through a tender offer to buy back their shares in the company following the funding, although no details and timing have been decided, according to a source.

Earlier this year, the company allowed some employees to cash out their shares at a valuation of $86bn.

Thrive Capital, which committed about $1.2bn from a combination of its own fund and a special purpose vehicle for smaller investors, negotiated the option to invest another $1bn next year at the same valuation if the AI firm hits a revenue goal, sources added.

Apple, which was in talks to invest in OpenAI, did not end up joining the funding, sources said, who requested anonymity to discuss private matters. Apple did not immediately respond to a request for comment.

The funding came in the form of convertible notes, and the conversion to equity hinges on a successful structural change into a for-profit that the non-profit board and the removal of a cap on investor returns would no longer control.

The personnel changes haven’t deterred enthusiasm from most investors, who are anticipating significant growth based on OpenAI CEO Sam Altman’s projections.

The company is on pace to generate $3.6bn in revenue this year on mounting losses of over $5bn. It projects major revenue jump next year to $11.6bn, according to sources familiar with the figures.

Investors have also secured some protections as OpenAI undergoes the complex corporate restructuring that would grant Altman equity. The talks are still ongoing, and no timeline has been determined yet.

Investors have negotiated terms that would allow them to claw back their capital or renegotiate the valuation if the changes are not implemented within two years, sources said.

OpenAI’s meteoric rise in terms of product popularity and valuation has captured the world’s imagination. Since the launch of ChatGPT, it has attracted 250 million weekly active users. The company’s valuation has also risen from $14bn in 2021 to $157bn as it grew revenue from zero to $3.6bn, far exceeding Altman’s projections at the time.

The company has told investors it is still actively pursuing artificial general intelligence (AGI), meaning developing AI systems that surpass human intelligence, as it ramps up commercialisation and tries to be profitable.

Read: UAE President, US Commerce Secretary discuss MGX’s $30bn AI fund