OpenAI value surges to $157bn in funding deal


Chief executive Sam Altman is said to be restructuring the company to become a for-profit entity, stripping it of its non-profit board.

While the company’s transformation has helped attract investors, it has alienated some members of its staff and critics.

Those critics include OpenAI co-founder Elon Musk who departed the firm in 2018. He has said the company has abandoned its founding mission of developing AI for the benefit of humanity.

OpenAI is widely credited with helping bring artificial intelligence tools into the mainstream and sparking a gush of wider investment and interest in the sector.

“The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems,” OpenAI said.

Funders in the latest round included investment firm Thrive Capital, Japanese tech conglomerate SoftBank, American chip giant Nvidia, and Microsoft, which already has a large stake in the company.

Under the terms of the deal, investors can renegotiate or claw back their funds if the structural change into a for-profit does not take effect within two years. It also hinges on and the removal of cap on returns for investors.

While the valuation announced Wednesday looked high by normal standards, “these are not normal times,” said Karl Freund, principal analyst at Cambrian AI Research.

“Unless AI is somehow a bust, which I cannot imagine, OpenAI will be a powerful force to be reckoned with.”

OpenAI said it has 250 million weekly active users, as well as one million paying business customers.

The company is on track to generate $3.6bn in revenue. But projected losses of more than $5bn are set to outpace revenue, according to Reuters, external.

Pressure to quickly rollout new versions of its blockbuster chatbot has also strained relations between OpenAI’s research and safety teams and staff focused on monetising the company’s products, according to reports, external.

OpenAI has seen an exodus of key executives in the year since Mr Altman was briefly ousted as its top executive in November, with departures including former chief scientist Ilya Sutskever.

Last week, the company’s long-time chief technology officer Mira Murati stepped down, saying in a statement that she had “made the difficult decision to leave” after much reflection.

Two top OpenAI researchers also announced their departures the same day as Murati.



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