OpenAI Raises $40bn to Boost AI Research

By Adedapo Adesanya

Artificial Intelligence (AI) company, OpenAI, on Monday announced that it closed one of the largest private funding rounds in history to boost AI research.

According to a blog post on the company’s website, OpenAI raised $40 billion in a round that values the company at $300 billion.

Japan’s SoftBank led the round, with other participants including Microsoft, Coatue, Altimeter, and Thrive, all of which are earlier backers in the outfit.

OpenAI said it plans to use the fresh capital to “push the frontiers of AI research even further” and scale its compute infrastructure, according to the blog post.

“[This new capital] enables us to push the frontiers of AI research even further, scale our compute infrastructure, and deliver increasingly powerful tools for the 500 million people who use ChatGPT every week,” OpenAI wrote in the blog post.

“We’re excited to be working in partnership with SoftBank Group — few companies understand how to scale transformative technology like they do.”

About $18 billion of the funding is expected to be used for OpenAI’s commitment to Stargate.

Recall that the joint venture between SoftBank, OpenAI and Oracle was announced by President Donald Trump in January.

The initial funding will be $10 billion, followed by the remaining $30 billion by the end of 2025, the person said. But the round comes with a caveat.

SoftBank said in an updated disclosure that its total investment could be slashed to as low as $20 billion if OpenAI doesn’t restructure into a for-profit entity by December 31.

This come amid pressure on OpenAI to pull off the for-profit conversion, a plan that will need the blessing of Microsoft and the California Attorney General, and has been challenged in court by Mr Elon Musk, who was one of the co-founders of OpenAI in 2015, when it was started as a non-profit research lab.

The company’s current and unusual hybrid structure includes a capped-profit limited partnership created in 2019. The original nonprofit is the controlling shareholder and would be spun out as an independent entity if the company can restructure.

OpenAI’s venture backers have received convertible notes that would turn into equity.