OpenAI close to securing record US$40B funding led by SoftBank

NEW YORK: OpenAI is close to securing a US$40 billion (S$53.63 billion) funding round led by SoftBank Group, with Magnetar Capital, Coatue Management, Founders Fund, and Altimetre Capital Management expected to invest, according to sources familiar with the matter.

Bloomberg reported that data from research firm PitchBook shows this would be the largest funding round of all time, valuing OpenAI at US$300 billion—nearly double its US$157 billion valuation from October.

As part of the deal, SoftBank will invest US$7.5 billion initially, with another US$2.5 billion coming from a group of investors. A source said a second tranche of US$30 billion is expected later this year, with US$22.5 billion from SoftBank and US$7.5 billion from a syndicate.

Sources added that Evanston, Illinois-based hedge fund Magnetar Capital may contribute up to US$1 billion.

According to Bloomberg, OpenAI reported US$3.7 billion in revenue last year and expects to more than triple that to US$12.7 billion this year. Revenue is expected to more than double again next year, reaching US$29.4 billion.

A source said OpenAI is facing high costs from chips, data centres, and specialised talent needed to advance its AI technology. The company does not expect to be cash-flow positive until 2029, when it projects revenue to exceed US$125 billion.

SoftBank has also committed billions to the Stargate Project, a joint venture in Abilene, Texas, with partners including OpenAI, Oracle Corp., and MGX.

However, news of the company’s large spending caused its shares to fall 4.7 per cent in Tokyo, partly due to its widening credit default swaps (CDS), which signalled concerns about its ability to meet financial obligations. /TISG 

Read also: OpenAI reportedly looking to raise US$40B in new funding led by SoftBank

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