OpenAI has raised $122 billion from investors in one fell swoop. The funding round serves as a stepping stone to an IPO later this year.
$122 billion: this astronomical amount is in OpenAI’s collection box after the latest investment round. Never before has a company raised so much money from private investors in one go. OpenAI even claims it makes ‘the largest IPO ever pale in comparison.’ For comparison: $122 billion is more than the GDP of small European countries such as Croatia, Luxembourg, and Lithuania.
During the investment round, OpenAI could once again count on loyal investors Amazon, SoftBank, and Nvidia, which had previously shown some reluctance. In addition to investment firms, private investors were allowed to participate for the first time. The company’s market value has risen to $852 billion, bringing OpenAI closer to the one-trillion club.
Conquering the enterprise market
OpenAI managed to convince investors with its plans to focus on the enterprise market. This currently accounts for about forty percent of revenue, which OpenAI wants to see grow to at least half in the long term. OpenAI is willing to make sacrifices for this: the popular video generator Sora was unceremoniously scrapped to free up more resources.
Among other things, it wants to merge ChatGPT with Codex and its browser into a single platform to appeal more to business users. In a blog post, it outlines its plans for a ‘super app.’
To achieve this, OpenAI must constantly invest in computing power and data center capacity. That is where the shoe pinches for the company: these investments currently cost more money than OpenAI earns from its AI products. OpenAI therefore desperately needs the investors’ money to continue funding everything.
IPO
With $122 billion in fresh and promised dollars, there will be some breathing room again. However, OpenAI will not see all the money in its bank account at once. For many investors, it involves promises to pay in installments or when OpenAI meets certain milestones, such as achieving artificial general intelligence. Amazon is already transferring $15 billion.
The record-breaking investment round is not yet the ceiling for OpenAI. It is intended only as a warm-up for the IPO planned for later this year.