OpenAI secures record $40 billion funding led by SoftBank

Source Cryptopolitan

OpenAI officially announced on Monday that it completed its fundraising campaign at $40 billion making it the largest private funding of a tech company. This historic round increased OpenAI’s value to $300 billion, which puts it among the most valuable private tech companies across the globe.

This funding round was led by the Japanese conglomerate SoftBank which made an initial investment of $30 billion. Other new and existing investors include Microsoft, Coatue Management, Altimeter Capital and Thrive Capital among others.

Stargate project takes center stage

The largest amount, $18 billion, is allocated to Stargate, a plan unveiled in January by President Donald Trump. Stargate is a joint venture of OpenAI, SoftBank, and Oracle, intended to build numerous large-scale data centers for AI computation in America.

According to estimates, Stargate will require a total of $500 billion, which highlights the need for infrastructure to support rapidly developing AI tools. Stargate will receive $10 billion in investments, while another $30 billion will be targeted by the end of 2025.

SoftBank plans to syndicate about $10 billion of the commitment to other yet unnamed investors. However, there is a condition related to the funding round: SoftBank’s total investment might be reduced to $20 billion in case OpenAI does not transform into a for-profit company by December 31 of this year.

ChatGPT’s explosive growth

The optimism towards OpenAI also grows from the rapid user adoption of its primary product, ChatGPT. The chatbot is reportedly reaching up to 500 million users weekly this month, up from 400 million the previous month.

CEO Sam Altman noted this exponential growth trajectory in a post on X: “ The chatgpt launch 26 months ago was one of the craziest viral moments i’d ever seen.”

The recent increase in usage is also in line with the improvement in ChatGPT’s capabilities, especially in image generation.

Redefining private tech investments

Prior to OpenAI’s $40bn round, the biggest fundraising by a private tech company was completed by Ant Group at $14bn in 2018, Juul Labs at $12.8bn, and DiDi Global at $10.8bn. OpenAI secured $10 billion early in 2023, and Databricks followed by issuing its $10 billion in the same year.

After this round of funding, OpenAI ranks behind only SpaceX, worth $350 billion, and ByteDance, which owns TikTok, at $300 billion per CB insights.

OpenAI intends to spend the newly acquired funds strategically, focusing on the development of new AI technologies and the evolution of infrastructure scaling. The company predicts that it will generate revenue of about $12.7 billion by the end of the year.

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