OpenAI secures $6.6 billion funding at $157 billion valuation

OpenAI has completed the largest venture capital funding round in history, raising $6.6 billion. This latest influx of cash now values the AI research and development company at $157 billion post-money. 

As per reports, the funding round was led by previous investor Thrive Capital, which committed $1.3 billion with an option to invest an additional $1 billion by 2025 at the same valuation. Microsoft invested just under $1 billion in this round, while Nvidia contributed $100 million and SoftBank added $500 million. Other participants included Khosla Ventures, Altimeter Capital, Fidelity, and MGX.

The company has stated that the new funding will be directed towards maintaining and expanding its leadership in cutting-edge AI research. The company will focus on increasing its computing power and resources to further develop advanced AI models. These efforts include improving training processes for AI systems and creating new tools designed to address complex problems across industries. The additional resources are expected to help the company stay competitive in a rapidly evolving field.

Reports suggest that the company has requested that its investors avoid backing rival AI startups such as Anthropic and Elon Musk’s xAI. These conditions highlight the competitive landscape within the AI sector, where companies are vying for supremacy in AI advancements. The company's move reflects an attempt to consolidate support from its investors and limit potential conflicts of interest.

Despite facing rising competition from other AI companies, the company continues to lead the generative AI market, with over 250 million users for its ChatGPT model, and around 10 million paying subscribers. However, maintaining this leadership comes at a steep cost. The company has reportedly spent around $7 billion on model training and $1.5 billion on staffing. Additionally, it is said that running ChatGPT costs the company as much as $700,000 a day.

In light of its high operational costs and ambitious revenue goals, the company may consider raising the price of its premium ChatGPT Plus subscription from the current $20 per month to $44 per month by 2029. This would reflect both increased demand and the company’s need to sustain its expansive infrastructure and AI development efforts over time.

OpenAI is currently governed by a nonprofit entity that limits investor returns, but there are strong indications that the company will move toward a more traditional for-profit structure in the near future. Reports suggest that the completion of this $6.6 billion funding round was contingent on the company's shift away from nonprofit governance, allowing the firm to attract more investment and provide greater returns to stakeholders.

As part of its long-term growth strategy, the company is expected to explore capital-intensive projects such as developing its own AI chips and datacenters, reducing its reliance on external hardware providers like Nvidia. Additionally, the company plans to secure licensing agreements with organisations like Reddit and Condé Nast, giving OpenAI a competitive edge in data access while also shielding it from potential intellectual property lawsuits.

OpenAI has recently seen several high-profile executive departures, raising concerns about internal leadership and strategic direction. CTO Mira Murati, Chief Research Officer Bob McGrew, and VP of Research Barret Zoph all resigned in late September, following earlier exits by co-founder Ilya Sutskever and research scientist Andrej Karpathy. These changes come amid reported disagreements over the company’s future direction, leaving only three of the original 13 co-founders still with the company.