ChatGPT parent OpenAI inched closer to finalizing a $40 billion funding round as of Thursday, led by SoftBank Group Corp and investors Magnetar Capital, Coatue Management, Founders Fund, and Altimeter Capital Management.
Magnetar Capital could contribute up to $1 billion, Bloomberg reported, citing unnamed sources familiar with the matter.
The deal could value the company at $300 billion compared to its previous valuation of $157 billion in the October funding round.
SoftBank will commit an initial $7.5 billion to the company and $2.5 billion from an investor syndicate. According to the report, the second tranche of $30 billion will include $22.5 billion from SoftBank and $7.5 billion from a syndicate.
SoftBank is reportedly negotiating an investment of $15 billion-$25 billion in OpenAI, making it the largest investor in the ChatGPT creator. This would surpass Microsoft Corp
Reportedly, OpenAI and Microsoft negotiated to convert Microsoft's $14 billion investment in OpenAI into equity in the AI company.
Reports also indicated that OpenAI and Microsoft are facing tensions in their partnership due to financial strain and rising expenses at OpenAI. OpenAI asked Microsoft for additional funding and computing power, but Microsoft has been hesitant since OpenAI's leadership changes. OpenAI's projected computing expenses could reach $37.5 billion annually by 2029.
Separately, SoftBank has committed billions to the Stargate Project, a Texas-based joint venture with partners including OpenAI, Oracle Corp
OpenAI expects to more than triple its revenue this year to $12.7 billion. In 2024, it generated $3.7 billion in revenue. OpenAI expects sales to proliferate to $29.4 billion in 2026.
Still, OpenAI doesn't expect to be cash-flow positive until 2029, when it projects revenue to top $125 billion as it grapples with AI development costs.
As of February, SoftBank committed $40 billion in OpenAI at a $260 billion valuation, CNBC reports. It expects to earmark part of the funding to OpenAI's commitment to Stargate.
