OpenAI Has Discussed Raising Money From Saudi Arabia, Indian Investors
The Takeaway
• OpenAI has talked to Saudi’s PIF and India’s Reliance for its $40 billion fundraise
• Lead investor SoftBank has also been buying employee shares
• OpenAI has told investors it wants to raise another $17 billion in 2027
OpenAI has talked to Saudi Arabia’s Public Investment Fund, Indian conglomerate Reliance Industries and existing shareholder United Arab Emirates’ MGX about investing in the next installment of its $40 billion financing led by SoftBank, according to two people familiar with the fundraise. The investors could put in at least hundreds of millions of dollars each, they said.
An investment in OpenAI by Saudi Arabia’s $900 billion–plus wealth fund would underscore the kingdom’s renewed interest in directly investing in U.S. technology startups. It’s a change from years past, when it backed tech startups through dozens of U.S. venture funds, such as Andreessen Horowitz and Iconiq Capital, as well as SoftBank’s Vision Fund.
PIF has long ties to SoftBank, which was the biggest investor in the telecom conglomerate’s $100 billion first Vision Fund. More recently, PIF established a new artificial intelligence company, Humain, which plans to set up a venture fund to back AI companies that will use Humain’s technology.
OpenAI, which hasn’t previously received investments from Saudi Arabia’s PIF, has also been strengthening ties in the country. OpenAI CEO Sam Altman met with Saudi Crown Prince Mohammed bin Salman during President Donald Trump’s visit to Riyadh last month, which coincided with the kingdom’s AI announcements.
To meet its mammoth funding needs, OpenAI has to expand its investors beyond main backer Microsoft and Silicon Valley venture firms. The company’s staff have also told some investors it expects to raise an additional $17 billion in 2027, although the size and timing of that round could change.
OpenAI is talking to Saudi’s PIF and other investors about raising $30 billion to complete the previously announced $40 billion funding round. The round values the ChatGPT maker at $260 billion before the investment.
OpenAI has already received the entire $10 billion of the first installment, including $2.5 billion from investors other than SoftBank.
Sequoia Capital and Andreessen Horowitz, which previously bought shares in OpenAI from other shareholders, and Singapore sovereign wealth fund GIC, a new investor, have each invested at least $200 million in that installment, the people said. Microsoft, Thrive Capital, Coatue, Altimeter Capital and Tiger Global Management have also invested.
Thanks to the additional backers, SoftBank’s portion of the first installment has fallen to $7.5 billion from $8.5 billion in April, according to the people.
Details of the new investments and funding talks haven’t previously been reported.
Rising Compute Costs
For the second installment of $30 billion slated to close in December, SoftBank has said it could invest at least three-quarters, leaving it to find investors to cough up another $7.5 billion. But it’s not clear how the telecom conglomerate run by Masayoshi Son will finance an investment of more than $20 billion. It could take out loans or sell some of its public shares, such as those it has in British chip designer Arm Holdings.
OpenAI has also discussed raising at least $100 million each from Coatue and Founders Fund as part of the $30 billion raise, according to the people. Talks with investors in the $30 billion raise, including PIF, are still early and the line-up could change.
OpenAI’s capital needs are unprecedented. Since late March, the San Francisco startup has been serving more than 500 million active users of ChatGPT per week, up from 300 million in December as the chatbot becomes an essential tool for consumers and enterprises.
Between 2025 and 2027, OpenAI has projected spending about $35 billion just on servers to power existing products and another $55 billion on servers to develop its technology.
Completion of the second installment depends on OpenAI’s ability to enact a corporate restructuring by year-end. OpenAI, which is governed by its nonprofit’s board of directors, last month backed down from an earlier plan to separate the for-profit arm, which plans to convert into a public benefit corporation, from the nonprofit’s control.
Instead, the nonprofit will continue to oversee the for-profit unit. But it will continue with a plan to give shareholders traditional equity rather than the capped profit units it has awarded in the past.
SoftBank Buy-In
If OpenAI isn’t able to complete the watered-down restructuring, SoftBank could slash the size of the total round in half, to $20 billion. XAI CEO Elon Musk and some California nonprofits have contested the conversion, and the attorneys general of California and Delaware are investigating it.
While this process plays out, SoftBank has been buying shares from OpenAI employees. Between March and May, the firm purchased about $240 million worth of shares from a small group of current and former employees, according to a person familiar with the fundraise.
Last fall, before the $40 billion megaround commenced, SoftBank bought about $2 billion of new and existing OpenAI shares.
To raise the second installment, OpenAI may lean on entities with which it has a growing relationship. Its executives have discussed a potential product and sales partnership with Reliance, which owns India’s top wireless carrier, Jio, as well as the world’s largest oil refinery.
OpenAI wants Reliance businesses to distribute or sell its AI. India is OpenAI’s second biggest market by users, Altman said in February.
Meanwhile, OpenAI, SoftBank and MGX—along with Oracle—have teamed up on the Stargate project to finance and build $500 billion in AI data centers.
Few U.S. tech startups have raised directly from Saudi funds in recent years. Some have not wanted to take money from Saudi Arabia over concerns the investments would get entangled in U.S. national security probes. However, the Trump administration has encouraged American AI firms to forge closer ties to the kingdom.
For instance, Cisco Systems and AMD are planning to make equity investments in a division of PIF’s Humain that sells access to chips for building and running AI models.