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OpenAI raises $6.6B and is now valued at $157B | TechCrunch

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TechCrunch·techcrunch.com/2024/10/02/openai-raises-6-6b-and-is-now-v...

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Reports OpenAI's record $6.6B funding round at $157B valuation, relevant to AI safety as it reflects the massive capital flows into frontier AI development, competitive dynamics among leading labs, and the financial pressures shaping AI deployment decisions.

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Importance: 35/100news articlenews

Summary

OpenAI closed a $6.6 billion funding round led by Thrive Capital, valuing the company at $157 billion post-money — the largest VC round in history. The funds will support frontier AI research, compute expansion, and talent acquisition as OpenAI burns through billions annually. Key investors include Microsoft, Nvidia, SoftBank, and others, with reported conditions restricting investors from backing rivals like Anthropic and xAI.

Key Points

  • •OpenAI raised $6.6B at a $157B valuation, bringing total funding to $17.9B — the largest VC round ever recorded.
  • •Funds are needed to cover ~$8.5B in annual costs including $7B on model training and $1.5B on staffing.
  • •OpenAI reportedly asked investors to avoid funding rival AI startups such as Anthropic and xAI.
  • •ChatGPT has 250M users and annualized revenue of $3.4B, with projections of $100B revenue by 2029.
  • •Competitive pressure from Anthropic, xAI, Google, Meta, and others is intensifying across frontier AI development.

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ChatGPT maker OpenAI has closed the largest VC round of all time.

 The startup today announced that it raised $6.6 billion in a funding round that values OpenAI at $157 billion post-money. Led by previous investor Thrive Capital, the new cash brings OpenAI’s total raised to $17.9 billion, per Crunchbase.

 
 
 
 

 
 
 
 

 Thrive invested around $1.3 billion, per The New York Times, with an exclusive option to invest up to $1 billion more at the same valuation (through 2025). Microsoft, Nvidia, SoftBank, Khosla Ventures, Altimeter Capital, Fidelity, and MGX also participated in the fundraising. 

 Microsoft reportedly invested a little less than $1 billion, while Nvidia pledged $100 million and SoftBank put in $500 million, reports The Wall Street Journal.

 “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,” the company wrote in a blog post. “We’re grateful to our investors for their trust in us, and we look forward to working with our partners, developers, and the broader community to shape an AI-powered ecosystem and future that benefits everyone.”

 There may be unusual strings attached. This morning, the Financial Times reported that OpenAI asked investors to avoid backing rival startups such as Anthropic and xAI. We’ve reached out to the company for more information and will update this post when we hear back.

 OpenAI was already the world’s best-funded AI startup. But the mammoth new tranche puts the San Francisco company in a category all its own.

 
 
 
 
 
 

 Elon Musk’s AI venture, the aforementioned xAI, raised over $6 billion earlier this year, but at a valuation dwarfed by OpenAI’s ($24 billion post-money). Chief OpenAI rival Anthropic has secured just over half OpenAI’s total ($9.7 billion) since its founding, while high-profile AI ventures Cohere and Mistral’s capital war chests are hovering around $1 billion.

 So why did OpenAI need to raise more cash than the government of Zimbabwe spent in 2021? Well, quite simply, to sustain its sprawling operations. OpenAI is reportedly burning through billions training and productizing its AI systems — systems like the recently debuted o1 — and recruiting coveted data science talent to stay apace with the competition.

 According to The Information, OpenAI has spent roughly $7 billion on model training and $1.5 billion on staffing. (OpenAI CEO Sam Altman has said that one of the company’s older leading models, GPT-4 , cost more than $100 million to train.) And at one point in time, ChatGPT alone was said to be costing OpenAI $700,000 a day to run.

 
 
 
 

 
 
 
 

 OpenAI is far and away the market leader in generative AI. ChatGPT has more than 250 million users (around 10 million of which are paying subscribers), and OpenAI’s annualized revenue has reportedly eclipse

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