OpenAI secures USD6.6 billion in venture capital funding
Date
10/3/2024 5:41:10 AM
(MENAFN) OpenAI announced on Wednesday that it has secured USD6.6 billion in venture capital funding, marking a significant pivot from its nonprofit origins. This funding round, led by Thrive Capital, saw participation from major technology firms such as Microsoft, Nvidia, and SoftBank. According to sources familiar with the situation, this investment is one of the largest fundraising efforts in U.S. history, and it stands out as the biggest in the last 17 years that doesn't rely on a single wealthy backer, as reported by PitchBook.
Last year, Microsoft significantly bolstered OpenAI's finances with a USD10 billion investment, acquiring a substantial stake in the company's anticipated growth. This strategic move is reminiscent of tobacco company Altria Group's USD12.8 billion investment in vaping startup Juul in 2018, which also aimed to capitalize on future profitability. OpenAI indicated that the latest funding will enhance its capabilities in advanced AI research, expand its computing resources, and facilitate the development of tools designed to help address complex challenges. This investment raises OpenAI's market valuation to USD157 billion, further propelling its mission forward.
The recent influx of capital aligns with OpenAI's goal of transitioning more fully from a nonprofit research entity to a profit-driven corporation that is answerable to shareholders. Although OpenAI's for-profit division has been expanding rapidly and employs the majority of its workforce, it is still governed by a nonprofit board that aims to ensure the safe and ethical advancement of AI technologies for humanity's benefit.
Should the board implement its plan to convert into a public-benefit corporation—a corporate structure designed to balance societal contributions with profit—the governance framework would shift, potentially allowing for greater profit generation and returns for investors. Alongside Thrive Capital, other prominent backers of this funding round include Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest, and Tiger Global Management.
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