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OpenAI, the startup behind the popular conversational AI model ChatGPT, has secured new funding from several venture capital firms. Investors include Tiger Global, Sequoia Capital, Andreessen Horowitz, Thrive, K2 Global, and Founders Fund, according to documents seen by tech publication TechCrunch.

The VCs have invested just over $300 million, valuing OpenAI between $27 billion and $29 billion. This latest round of funding is separate from Microsoft’s $10 billion investment earlier this year. The Wall Street Journal first reported on this tender offer in January, and discussions have been ongoing.

OpenAI has declined to comment on the tender offer, but a source has confirmed that the term sheets have been signed, and the money has been transferred. The investment is expected to be made public next week.

Outside investors

OpenAI is now more than 30% owned by outside investors. According to PitchBook data, Peter Thiel had previously backed the startup, but this is the first time Founders Fund, K2 Global, and Thrive have invested. Sequoia, Andreessen Horowitz, and Tiger Global have already invested in OpenAI’s early days.

OpenAI has a team of technical experts working on various AI projects, but its GPT family of large language models has gained significant attention. ChatGPT, a generative AI service released at the end of 2022, has been a hit, with over a billion visitors to its website in February. However, the product has also attracted criticism and controversies regarding its potential to spread misinformation and violate privacy.

Despite this, the ecosystem around OpenAI’s technology is rapidly developing, with hundreds of businesses incorporating GPT and ChatGPT into their products and services. The trend has encouraged other tech companies, such as Google and Meta, to speed up the development of their own generative AI models.

A golden apple

OpenAI’s singular focus on AI since its founding in 2015 has given it a significant advantage over its competitors. Its valuation, growing ecosystem, and unique position in the industry have attracted venture capitalists’ attention.

As one source put it, “They’re probably trying to use this [funding] to say, hey, look, we found a golden apple. Venture is a very strange place where anything can happen. You can go big to broke to big again, at any time.”

The new funding will likely enable OpenAI to continue its AI research and development efforts, expand its services, and strengthen its position in the market.

Also read: Italian regulator lifts its ban on ChatGPT