OpenAI Funding: $11 Billion Closes at $1.25 Trillion

OpenAI funding took a step forward on Friday as the ChatGPT maker closed the first part of its latest round, banking $11 billion at a valuation of $1.25 trillion, according to a source familiar with the matter who spoke to Reuters. Bloomberg News reported the financing earlier on Friday, and investors wired the money on November 6.

The money is only the opening portion of a larger round. OpenAI originally sought as much as $30 billion, investors told Reuters, and the company had aimed for a valuation of $1.5 trillion before settling lower. The Financial Times reported in late October that the target had been cut to $20 billion. That leaves roughly nine billion dollars still to be raised if the round reaches its revised total.

A smaller round than first planned

Bloomberg first reported the round in late September, when the valuation under discussion stood at $1.4 trillion. The terms moved twice in five weeks. The Financial Times reported on October 30 that the target had been reduced after some investors trimmed their commitments ahead of a deadline, and the valuation came down with it.

SoftBank and MGX took part in the first close, investors told Reuters. Investors from the United Arab Emirates are leading the round alongside Coatue, according to Bloomberg, and OpenAI has also been negotiating a commercial agreement for additional computing capacity from the Emirates. Founders Fund, Sequoia Capital and Andreessen Horowitz were also expected to take part, the Financial Times reported.

The March round also changed how OpenAI raises money. The company said it raised more than $3 billion from individual investors through bank channels, the first time it had opened a round to that group. SoftBank co-led that financing alongside Andreessen Horowitz, D. E. Shaw Ventures, MGX, TPG and accounts advised by T. Rowe Price Associates.

OpenAI chief financial officer Sarah Friar discussed the fundraising in a CNBC interview on Friday and pushed back on suggestions that the company had scaled back its ambitions, Reuters reported. OpenAI has not published its own statement on the new round and did not respond to Reuters' request for comment.

The Wall Street Journal reported that some major investors gave the round a lukewarm response, according to people familiar with the matter. The Financial Times reported that the deal was overshadowed by the sell-off in public markets and the imminent listing of Anthropic.

Why the terms changed

Sentiment toward AI companies has cooled in the past month, Reuters reported, with some investors valuing rival Anthropic's planned listing below earlier expectations. The funding news landed in the same week that technology shares fell sharply around the world, as investors reassessed the cost of the AI buildout.

The cooler mood showed up in public markets as well. The Nasdaq 100 fell six percent on Thursday, wiping out $2.5 trillion in value in a single session, according to Finimize. Rival Anthropic's planned listing was also being valued at about one and a half trillion dollars, below earlier expectations of roughly two trillion dollars, Reuters reported.

The new valuation is still well above where OpenAI stood in the spring. In a statement on March 31, the company said it had closed a round with $122 billion in committed capital at an $852 billion post-money valuation, anchored by Amazon, NVIDIA and SoftBank, with continued participation from Microsoft. The November price is about 47 percent above that March figure.

OpenAI remains a private company, so the valuation comes from the price investors paid in the round rather than a public market. That makes each funding round a public marker of how the private market values the ChatGPT maker, and the lower price this time shows the mood has cooled. The new capital could support research into future models and access to computing infrastructure, according to reports of the round.

OpenAI is expected to brief investors on its third-quarter results next week, The Information reported, in a call that follows the first close. The remaining commitments are expected to land in the coming weeks, Bloomberg reported. The company has not said when the rest of the round will close. Reuters reported the close on Friday, and Unite.AI covered the first close and the March comparison.