OpenAI completes deal that values company at $157 billion

SAN FRANCISCO — OpenAI said Wednesday that it had completed a $6.6 billion fundraising deal that more than doubles the high-profile company’s valuation from just nine months ago.

The new fundraising round, led by investment firm Thrive Capital, values OpenAI at $157 billion, according to two people with knowledge of the deal. Microsoft, chipmaker Nvidia, tech conglomerate SoftBank, United Arab Emirates investment firm MGX and others are also putting money into OpenAI.

The company started the artificial intelligence boom in 2022 with the release of its online chatbot ChatGPT, sparking a race to invest in startups that develop similar technology. And its latest investment round indicates that the tech industry’s excitement over AI remains strong, despite concerns about the effectiveness and the safety of the technology.

Investments in AI startups cooled earlier this year as several were essentially swallowed by tech giants Google, Microsoft and Amazon, which are building technology similar to what OpenAI has been working on. But OpenAI’s profile has given it a major head start. Its revenues are rising quickly, but it is losing billions of dollars because of the unusually high cost of building and running AI technologies like ChatGPT.

Just nine months ago, OpenAI was valued at $70 billion. The company now has about 1,700 employees, after adding more than 1,000 workers in that period.

OpenAI expects about $3.7 billion in sales this year, according to financial documents reviewed by The New York Times. But it also expects to lose roughly $5 billion after paying for costs related to running its services and other expenses, according to an analysis of the documents by a financial professional.

Thrive Capital has invested about $1.3 billion in OpenAI, with $750 million coming from its own fund and $550 million coming from other investors through an instrument called a special purpose vehicle, according to a person familiar with the deal. Thrive also has the option to invest up to $1 billion more in OpenAI at the same $157 billion valuation through 2025, the person said. Other investors do not have that option.

“Every week, over 250 million people turn to ChatGPT regardless of the scale of the challenge — whether it’s communicating with someone who speaks another language or solving the toughest research problems,” Sarah Friar, OpenAI’s chief financial officer, said in a statement.

The new funding arrives as the startup fights through growing pains. Executives are still trying to repair the company’s reputation after its board of directors unexpectedly fired CEO Sam Altman in 2023. He was reinstated five days later, but OpenAI has lost several high-profile employees since then, including its chief scientist and co-founder Ilya Sutskever.

Last week, OpenAI’s chief technology officer, Mira Murati, as well as its chief research officer, Bob McGrew, and its vice president of research, Barret Zoph, said that they were leaving the company.

The leadership tumult coincided with OpenAI’s efforts to close its fundraising round. At least one company that explored investing, Apple, backed away and declined to invest, two people said.

Some of the unrest stems from OpenAI’s unusual structure. Altman, Elon Musk and others founded the AI research lab in 2015 as a nonprofit. But after Musk left the organization and stopped providing funding, Altman transformed OpenAI into what is called a capped-profit company, so that he could raise the billions of dollars needed to build AI.

That meant OpenAI could provide a return for investors, but those profits were limited. The company was still governed by its original board of directors, which did not answer to investors.

OpenAI has also long been in talks to restructure itself as a for-profit company. But that is not expected to happen until sometime next year, according to two people with knowledge of the company’s plans.

Under the terms of the new investment round, OpenAI has two years to transform into a for-profit business, or its funding will convert into debt, according to documents reviewed by the Times.