OpenAI’s new financing round is expected to come in the form of convertible notes, according to sources with direct knowledge of the matter, who said its $150 billion valuation will depend on whether the ChatGate-maker can enhance its corporate structure and The profit limit may or may not be removed for investors.
Details of the terms of the $6.5 billion funding, which have not been previously reported, show how far OpenAI, the world’s most valuable AI startup, has come from a research-based nonprofit, and what structural changes it required. is set to attract more investment to finance its expensive pursuit of artificial general intelligence (AGI), or AI superior to human intelligence.
Sources said the large-scale funding round has seen strong demand from investors and is likely to be finalized in the next two weeks given the rapid growth in OpenAI’s revenues.
Existing investors such as Thrive Capital, Khosla Ventures and Microsoft are expected to participate. New investors including Nvidia and Apple are also planning to invest. Sequoia Capital is also in talks to come back as a returning investor.
If the restructuring is unsuccessful, OpenAI would need to renegotiate its valuation with investors, at which point their shares would be converted to a lower number, the sources told Reuters, asking not to be named to discuss private matters. Had requested not to print.
OpenAI declined to comment.
Removing the profit cap would require approval from OpenAI’s nonprofit board, which includes chief executive Sam Altman, entrepreneur Brett Taylor and seven other members.
The company has also discussed with lawyers about changing its non-profit structure to a for-profit corporation, as its rivals such as Anthropic and XAI are using, the sources said, confirming media reports.
It is not clear whether such fundamental corporate structural changes can occur. The removal of the profit cap, which placed a cap on the potential returns for investors in OpenAI’s profitable subsidiary, would provide even bigger wins to early investors.
It may also raise questions about OpenAI’s governance and departure from its non-profit mission. OpenAI has stated that this limit was “imposed to encourage them to research, develop, and deploy AGI in a way that balances commercialism with security and sustainability, rather than focusing on pure profit-maximization.”
The San Francisco-based AI Lab, founded in 2015 as a non-profit research project with the goal of building AI for the benefit of humanity, is currently controlled by a non-profit parent organization.
It has stepped up its commercialization efforts by selling subscription-based services to consumers and enterprises, such as ChatGPT, which now has more than 200 million users.
Existing investors are subject to a certain limit on returns on their investments, with any excess returns going to the nonprofit.
In OpenAI’s first round of funding, returns for investors were capped at 100 times the investment. “We expect this multiplier to be lower for future rounds,” the company said in a 2019 blog post detailing the structure.
OpenAI used this model to raise more than $10 billion in recent years, most of which came from Microsoft. It was last valued at $80 billion in a tender offer deal in February, where the company sold existing shares led by Thrive Capital.
© Thomson Reuters 2024
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