OpenAI is set to raise up to $40 billion in a landmark funding round led by SoftBank Group, valuing the artificial intelligence company behind ChatGPT at $300 billion, nearly doubling its previous valuation.

OpenAI Secures $40 Billion Investment Led by SoftBank at $300 Billion Valuation

The Japanese investment giant has committed to providing $10 billion in mid-April, with an additional $30 billion planned for December. The December investment is contingent upon OpenAI successfully transitioning to a for-profit structure by year-end.

Gil Luria of D.A. Davidson & Co
Gil Luria of D.A. Davidson & Co

"OpenAI has very ambitious plans on many fronts and needs a lot of capital to achieve these goals," industry analyst Gil Luria of D.A. Davidson & Co commented for Reuters.

SoftBank intends to syndicate $10 billion of its total investment to other investors. The remaining funding is expected to come from existing backers including Microsoft, Coatue Management, Altimeter Capital, and Thrive Capital.

If OpenAI fails to complete its planned restructuring, SoftBank's total investment would be reduced to $20 billion.

Expanding AI Capabilities

The San Francisco-based AI developer plans to use the massive capital infusion to advance its research initiatives, expand computational infrastructure, and enhance its suite of AI tools. OpenAI highlighted its goal to deliver increasingly powerful capabilities to the 500 million people who currently use ChatGPT on a weekly basis.

The funding comes amid surging investor enthusiasm for artificial intelligence technologies, driven by widespread adoption of chatbots and the emergence of sophisticated AI agents across industries. Enterprises have increasingly integrated AI solutions to streamline operations and improve customer experiences.

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Corporate Restructuring

As part of its growth strategy, OpenAI announced plans to establish a public benefit corporation structure. This new framework aims to attract additional investment while balancing shareholder interests with broader public benefits.

The company is also partnering with SoftBank and Oracle on the ambitious $500 billion Stargate project, which will establish a network of data centers designed to power AI workloads across the United States.

Valuation Milestone

The new funding round, which follows a $6.6 billion raise in October that valued OpenAI at $157 billion, propels the AI developer into the ranks of the world's most valuable private companies. This exclusive club includes Elon Musk's SpaceX, China's ByteDance, and payment processor Stripe.

SoftBank plans to finance its initial $10 billion investment through borrowings from Mizuho Bank and other financial institutions, with legal advice provided by Morrison Foerster.

Musk's Failed OpenAI Takeover Bid

In February, Elon Musk led an ambitious $97.4 billion takeover attempt of OpenAI. Altman promptly rejected the unsolicited offer, responding with a cheeky counter-proposal to purchase Musk's X platform for $9.74 billion instead.

The rejection underscores the intensifying conflict between the two tech titans. Musk, who co-founded OpenAI in 2015 but departed following governance disagreements, has repeatedly criticized the organization for abandoning its original nonprofit mission. Meanwhile, Altman maintains that transitioning to a for-profit structure is essential for securing the massive capital needed to advance AI research and development.

Shortly after his OpenAI acquisition attempt failed, Musk's AI company xAI unveiled Grok-3, a significant upgrade to its chatbot platform. The new model, which xAI claims was trained with ten times more computing power than its predecessor, features enhanced reasoning capabilities and a new "DeepSearch" function designed to compete directly with ChatGPT. According to xAI, Grok-3 outperforms rival models in mathematical reasoning and complex problem-solving benchmarks.

Source: Finance Magnates