Update, 12/9, 08:32 am: Indications had previously surfaced that OpenAI plans to hold its largest capital round soon. The round aims to raise $6.5 billion from investors, bringing the company’s valuation to 150 billion dollars (approximately 136 billion euros). Apple, Microsoft, and Nvidia are among the investors.
Original, 30/08, 2:50 PM: OpenAI hopes to hold its largest-ever capital round soon. Millions of dollars need to be raised, and that money could come from Apple, Microsoft, and Nvidia.
The new capital round should give OpenAI a valuation of $100 billion (about 90 billion euros). Several news sources report that Nvidia, Apple, and Microsoft will participate in the capital round. The most important are Bloomberg and The Wall Street Journal.
For Microsoft, this is an additional investment; the company has long been OpenAI’s lead investor. For Apple, the extra investment provides a further guarantee of collaboration in Apple’s AI operations on its devices. A similar story holds true for Nvidia. This company provides the infrastructure needed to train and deploy LLMs. The investment may allow Nvidia to ensure that OpenAI does not switch infrastructure as more and more competitors seek to curb Nvidia’s dominance.
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The capital round will be led by Thrive Capital, which invests $1 billion. Sources involved in Nvidia’s investment say the company is considering pumping $100 million into OpenAI.
Money urgently needed
The capital round is necessary for OpenAI to stay afloat. The cost of training new models is running high, reaching $7 billion by 2024. Added to that are costs for personnel and running infrastructure for ChatGPT. The devil is in the ever-increasing cost of training better LLMs. The AI maker is busy working on that. The next model is known as “Strawberry” and is even said to be an AI model with super intelligence. Maintaining all this will require a lot of money, and if OpenAI cannot guarantee investments, it will go bankrupt within a year.
Moreover, the new investments for OpenAI would be a sign that the market has renewed confidence in the company after the high-profile resignation and return of CEO Sam Altman. That confidence had to be rebuilt for Microsoft as well. For a while Microsoft seemed to prefer in-house development after acquiring much of Inflection AI‘s staff and licenses, and somewhat later abandoning its observer position on OpenAI’s Board of Directors.
Also read: OpenAI’s business model isn’t working as bankruptcy looms