OpenAI Is Finalizing First Commitments for $100 Billion Mega Round
The Takeaway
- OpenAI is finalizing first commitments for its $100 billion round
- SoftBank is expected to invest $30 billion over three installments
- Amazon, Nvidia to invest tens of billions of dollars
OpenAI is finalizing initial commitments from investors in a round that could raise $100 billion at a $830 billion valuation including the investment, according to two people with direct knowledge of the fundraising.
SoftBank is expected to anchor the round with a $30 billion investment, which it will spread in three installments of $10 billion each through the year, according to the two people. Amazon, which supplies cloud services to OpenAI, could invest as much as $50 billion; Nvidia, whose chips OpenAI’s models, could invest up to $30 billion; and long-standing partner Microsoft could invest in the low billions of dollars, according to one of the people.
Those investments could fulfill the company’s target $100 billion, which means additional investments from VC funds and other financial institutions could potentially push the round even past that figure, said the person. However, it’s not clear if the strategic investors will invest all of those amounts as the conversations are still ongoing, said one of the people.
Following this initial slate of commitments, OpenAI is also seeking backing from financial investors, said these people and one other. OpenAI executives have been communicating with existing investors Thrive Capital, Khosla Ventures, Founders Fund and Sequoia Capital about the round, as well as other investors, said one of the people. It’s not clear if these investors will put more money into the company, or how much it would be.
The funding is the first since OpenAI last fall restructured as a corporation that can issue standard equity, a key step in its path to an eventual IPO. Executives have discussed going public as soon as the fourth quarter, according to one of the people.
Investors in the latest financing, which OpenAI is terming its “Series C,” are getting preferred shares that will convert into Class A common stock in an exit, such as a public offering, according to two of the people. They will get 1X liquidation preferences, a typical deal term that promises investors that they will get at least their money back in the event of a sale of the company, said the people.
OpenAI has embarked on this mega funding round after raising about $61 billion from investors including Microsoft, Thrive and SoftBank. Last fall, it sold shares owned by employees and other shareholders at a $500 billion valuation.
The company has tapped investors’ enthusiasm for the AI pioneer as it anticipates surging costs to run and train its AI. Last summer, it forecast spending roughly $450 billion from 2025 to 2030 on those costs, as well as back up servers to support its growth.