OpenAI completes deal that values the company at $80 billion
OpenAI has struck a deal that values the San Francisco artificial intelligence company at $80 billion or more, nearly tripling its valuation in less than 10 months, according to three people with knowledge of the deal.
The company would sell existing shares in a so-called public offering led by venture capital firm Thrive Capital, the people said. The deal will allow employees to cash out their shares in the company, instead of a traditional financing round that would raise money for operations.
OpenAI, which declined to comment, is now one of the world's most valuable technology startups, behind ByteDance and SpaceX. This is evident from figures from data tracker CB Insights.
The deal is another example of the Silicon Valley deal machine pumping money into a handful of companies that specialize in generative AI – technology that can generate text, sound and images on its own. The funding wave started early last year, after OpenAI captured the public's imagination with the release of the online chatbot ChatGPT.
(The New York Times sued OpenAI and its partner Microsoft in December for copyright infringement of news content related to AI systems.)
The deal comes at a critical time for OpenAI, giving the company an important vote of confidence after a year of controversy. In November, the company's board of directors fired Sam Altman, the CEO, citing a loss of confidence in his leadership. The dismissal caused a week of chaos and put the company's future in doubt, as employees threatened to resign in solidarity with Mr. Altman. Ultimately, he was reinstated and several board members resigned.
In an effort to resolve last year's unrest, OpenAI has hired the law firm WilmerHale to review the board's actions and Mr. Altman's leadership. WilmerHale is expected to complete its report on the episode early this year.
The company agreed to a similar deal early last year. Venture capital firms Thrive Capital, Sequoia Capital, Andreessen Horowitz and K2 Global agreed to purchase OpenAI shares in a public offering, valuing the company at approximately $29 billion.
Investors are eager to put money into AI companies. Last January, Microsoft invested $10 billion in OpenAI, bringing its total investment in the San Francisco startup to $13 billion.
Thrive declined to comment.
Since then, Anthropic, a competitor to OpenAI, has raised $6 billion from Google and Amazon. Cohere, a startup founded by former Google researchers, raised $270 million, bringing its total funding to more than $440 million, and Inflection AI, founded by a former Google executive, also raised a $1.3 billion round on, bringing the total to $1.5 billion. .
OpenAI appeared close to closing its latest deal in November, when Mr. Altman was unexpectedly fired. In the week that followed, the potential deal loomed over Mr. Altman's efforts to negotiate his way back into the company. Before he was reinstated, more than 700 of the company's 770 employees signed a petition calling for his reinstatement.