OpenAI Engages in Preliminary Talks for Another Funding Round, Eyeing Valuation of $100 Billion or More, Poised to Become the Second-Most Valuable US Startup

OpenAI is reportedly in the initial stages of discussions to secure a new funding round, with insiders suggesting a valuation surpassing $100 billion. This potential deal positions the creator of ChatGPT among the globe’s most valuable startups.

Investors who might participate in the fundraising round have been part of initial talks, as disclosed by anonymous sources due to the confidential nature of the discussions. Key details such as terms, valuation, and the timeline for the funding round remain unsettled and are subject to potential changes, as indicated by these sources.

If the funding round proceeds as anticipated, it would position the beloved artificial intelligence entity as the second most valuable startup in the United States, trailing solely behind Elon Musk’s Space Exploration Technologies Corp., as per CBInsights data.

OpenAI declined to provide comments.

The company is in the process of finalizing a distinct tender offer in early January, enabling employees to sell their shares at an $86 billion valuation, as reported by Bloomberg. Thrive Capital is leading this initiative, and there is reportedly more investor demand than available shares.

OpenAI’s soaring valuation reflects the artificial intelligence craze it ignited a year ago with the introduction of ChatGPT, a chatbot capable of crafting remarkably human-like sentences and poetry in response to simple prompts. This propelled the company into Silicon Valley’s spotlight, securing $13 billion in funding to date from Microsoft Corp. and catalyzing a transformative shift in the tech industry’s outlook on the potential of AI within a few short months.

Amazon.com Inc. and Alphabet Inc. have invested substantial sums in Anthropic, a competitor to OpenAI. Salesforce Inc. spearheaded an investment in Hugging Face, valuing it at $4.5 billion, while Nvidia Corp., a major semiconductor producer for AI tasks, revealed over two dozen investments in 2023.

OpenAI has engaged in discussions with G42, based in Abu Dhabi, to secure funding for a new chip venture, as per insiders. According to anonymous sources, the startup is considering raising between $8 billion and $10 billion from G42. Notably, it remains unclear whether the chip venture is connected to broader funding initiatives for the company.

Sam Altman, OpenAI’s CEO, has actively sought capital for the chipmaking project, known as Tigris. The objective is to develop semiconductors that can rival those from Nvidia, a current leader in the AI chip market, as reported by Bloomberg News last month.

In October, G42 unveiled a partnership with OpenAI, aiming to provide cutting-edge AI solutions to the UAE and regional markets. No specific financial details were disclosed. Established in 2018, G42 is led by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s national security adviser and chair of the Abu Dhabi Investment Authority.

OpenAI faced a brief period of uncertainty in its future when its board unexpectedly dismissed Altman last month. This move led some investors to contemplate writing down their stakes to zero. However, after five days of leadership upheaval, Altman was reinstated, and a new board was appointed. The company is actively signaling to customers its renewed focus on products in the aftermath of these changes.