Venture capital firms participating in $6bn-plus OpenAI funding round betting start-up will be worth trillions, report says
OpenAI’s recently reported $6 billion (£4.5bn)-plus funding round represents a bet by venture capital firms that the company will grow to be worth trillions of dollars, the Financial Times reported.
The round, reported by Bloomberg last week, is said to value the generative artificial intelligence (AI) start-up at $150bn.
Thrive Capital has provided at least $1bn in recent weeks, and the company is aiming to raise an additional $5bn or more, the FT said.
Apple, Nvidia and Microsoft are reportedly in talks to join the round.
Great expectations
New York-based Tiger Global and the United Arab Emirates fund MGX are also reportedly seeking to invest.
Tech investment firms such as Andreessen Horowitz and Sequoia Capital are choosing not to participate in the current round in part due to concerns about being heavily exposed to a single company, the FT reported, citing unnamed sources.
Both companies have also invested in Elon Musk’s xAI rather than focusing solely on OpenAI.
Companies such as Thrive and Tiger typically invest smaller amounts in less well-established start-ups, seeking 10 to 100 times a return on their investment.
Such a return with OpenAI would require the company to grow from a chaotic start-up to a corporate giant worth at least $1.5tn, larger than Facebook parent Meta or Warren Buffett’s Berkshire Hathaway.
A partner at an investment firm that backed OpenAI compared generative AI to the cloud or the internet, saying it would be worth multiple trillions of dollars.
$150bn start-up
Aside from its own investment, Thrive has reportedly also created a special purpose vehicle through which other institutions can buy a stake in OpenAI, indicating strong demand.
Bloomberg reported that the round is expected to raise at least $6.5bn, topping the $6bn raised by xAI earlier this year.
Reports called the project the largest investment round of all time, producing only the second $100bn-plus startup in the US after Elon Musk’s SpaceX.
The Information reported that OpenAI is requiring a minimum investment of $250m.
Generative AI requires expensive computing power to operate, and OpenAI has been investing heavily in new products and features to compete with corporate giants such as Google and Meta, as it burns through more than $5bn a year.