Tiger Global Plans to Join OpenAI’s Funding Round
The Takeaway
• Tiger Global plans to invest in OpenAI
• Khosla and Thrive also investing
• Round values company at $150 billion
A clearer picture is emerging of OpenAI’s massive financing, which values the ChatGPT developer at $150 billion.
Venture capital firm Tiger Global Management plans to participate in the multi-billion dollar round, according to people familiar with the matter. Tiger would join Thrive Capital, Microsoft, Nvidia, Apple and the Abu Dhabi AI investment firm MGX, as well as Khosla Ventures which are also in talks to participate in the multi-billion dollar round.
Tiger developed a reputation during the peak of the record bull-market in 2021 for leading high-priced deals and pushing up valuations across private tech. That year, it inked over 300 VC deals, according to PitchBook. It has since marked down the value of many of its startup stakes and offloaded shares in some of its companies, including OpenAI rival Cohere, and has dramatically reduced its pace of investment, participating in only 19 VC deals so far this year.
The amount of Tiger's investment couldn't be learned. The deal wouldn’t be Tiger’s first investment in OpenAI. The firm purchased $125 million in OpenAI shares in late 2021 with capital from its $12.7 billion fund, The Information has previously reported. Tiger was also part of an investor group that pushed to get OpenAI’s board of directors to reinstate CEO Sam Altman after he was fired last fall.
Khosla is one of OpenAI’s earliest investors. The firm invested $50 million in OpenAI in 2019, becoming the first investor in the company’s for-profit subsidiary. Khosla raised a $900 million growth fund late last year.
It’s unclear whether the other VC firms that have previously backed OpenAI, including Sequoia Capital, Founders Fund and Andreessen Horowitz, will invest in the new round. Both Sequoia and Founders Fund sat out the 2023 secondary secondary round that valued OpenAI shares at $86 billion.
Some VC firms that balked at that $86 billion price tag are considering investing this time, despite the significantly higher valuation. That’s because investors in the latest funding round will receive newly issued shares in exchange for their investment, whereas in past financings OpenAI sold only shares held by earlier investors. Primary shares come with certain privileges, including access to company information, that secondary shares typically do not.
Venture firms participating in the new round, which is expected to raise a total of between $5 billion and $7 billion including money to buy out employees who want to sell some of their shares, have begun to form special-purpose vehicles, which pool money to invest in a specific company. Thrive, Khosla and Tiger all have SPVs and have solicited interest, according to the people familiar with the matter. Thrive Capital is leading the round and plans to commit $1 billion, one of the people said.
The $150 billion valuation ranks OpenAI amongst the highest-valued startups in the world and comes as the company reaches 10 million paying subscribers, The Information reported.
Those new numbers imply the company is generating more than $225 million in revenue per month. The company’s revenue has risen about 150% since the end of 2023 to $4 billion.
This week, the company released its highly-anticipated Strawberry reasoning AI, which has the ability to “think” before it responds to users to better answer queries.