Venture Capital: OpenAI Looking For Investors At A Valuation Of $86B

October 20, 2023 | Latest News, News, Venture Capital

According to reports, OpenAI has already hit over $1 billion in annual revenue.

OpenAI is in discussions with investors to sell shares at a staggering valuation of $86 billion, a threefold increase from its value just six months ago. This sharp rise in worth is attributed to the surging interest in artificial intelligence, which has significantly increased the market’s appetite for leading companies in the field.

If this stock sale at the targeted valuation goes through, OpenAI, the organization behind the ChatGPT chatbot, would rank among the world’s most highly valued private companies. In April of the same year, it was valued at $29 billion when it secured investments from entities like Microsoft and Thrive Capital.

Interestingly, OpenAI’s CEO, Sam Altman, won’t benefit directly from this valuation surge as he holds only an “immaterial” stake through the startup accelerator Y Combinator. OpenAI has been discussing a tender offer with existing investors, potentially allowing employees to sell their shares, with an estimated total of up to $1 billion in employee shares being offered. However, it’s uncertain whether this stock sale will be open to new investors. (FT)

The move to offer employee stock aims to enable staff to capitalize on the company’s success, which, in turn, will help OpenAI compete for engineering talent against established competitors like Google and Amazon. OpenAI is a prominent player in developing advanced chatbots powered by generative AI, drawing attention alongside other companies like Anthropic, Cohere, and Inflection.

ChatGPT, released last year, achieved a remarkable milestone by amassing 100 million monthly active users within just two months, marking it as the fastest-growing application ever launched. OpenAI has also introduced a mobile app version and added features such as image generation and analysis to ChatGPT.

Despite the substantial capital demands of training chatbots like ChatGPT, OpenAI wasn’t actively seeking nvestments from Middle Eastern sovereign wealth funds. The company has reported annual revenues exceeding $1 billion and expanded ChatGPT’s capabilities to include video and speech recognition.

While an $86 billion valuation may seem ambitious for venture capitalists, OpenAI’s impressive technological progress and revenue growth are poised to alter these perceptions. Vinod Khosla, an early backer in 2018, noted that OpenAI’s rapid advancement could quickly justify this valuation. The Wall Street Journal initially reported OpenAI’s valuation range of $80 billion to $90 billion, later narrowed to $86 billion, as per Bloomberg.

Related Story:  OpenAI Announces DALL-E 3, Integrated With ChatGPT

Photo by Zac Wolff on Unsplash

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