Meta

Artificial intelligence startup OpenAI is reportedly in talks with venture capital firms to raise the largest injection of fresh capital in more than a year, which could see the firm valued at over $100 billion.&nbsp;
Venture capital firm Thrive Capital will invest $1 billion in the funding round and tech giant Microsoft is also expected to front up capital, according to an Aug. 28 Wall Street Journal <a data-ct-non-breakable="null" href="https://www.wsj.com/tech/ai/openai-in-talks-for-funding-round-valuing-it-above-100-billion-4f0550c5" rel="null" target="null" text="null">report</a> that cited sources familiar with the matter.&nbsp;
The funding round would be the most significant injection of new capital for the AI firm since Microsoft invested $10 billion in the startup in January 2023. 
Microsoft currently holds a 49% stake in OpenAI, having invested $13 billion into the firm since 2019.&nbsp;
According to internal documents reviewed by The Wall Street Journal, OpenAI stockholders had been negotiating a deal to sell their shares at a price that would value the AI firm at around $103 billion.&nbsp;
The documents also showed any new investment in the firm would likely value OpenAI at this price or above, excluding any new funds generated by the raise.&nbsp;
In February, OpenAI signed a deal allowing its employees to sell their stakes in the company. The sales showed that OpenAI was privately <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/open-ai-artificial-intelligence-for-profit" rel="null" target="null" text="null">valued at around $86 billion</a>.&nbsp;
<h2 id="strong-openai-s-profitability-raises-eyebrows-strong">OpenAI’s profitability raises eyebrows</h2>
AI firms continue to attract investors despite reporting relatively small earnings. According to recent reports, OpenAI is running an annualized revenue of around $3.4 billion.&nbsp;
Several commentators have <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/open-ai-artificial-intelligence-ai-chatgpt-business-model" rel="null" target="null" text="null">criticized OpenAI’s business model</a>, with tech reporter Ed Zitron describing OpenAI’s path to profit as “untenable” on Aug. 2.&nbsp;
<figure>
 <img alt="OpenAI in talks to raise funds at over $100B valuation: Report" name="" src="https://s3.cointelegraph.com/uploads/2024-08/01919bc8-1d2b-7b34-94b7-ddf619116117">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/edzitron/status/1828879248985338324" rel="nofollow noopener" target="_blank" text="null">Ed Zitron</a>
 </figcaption>
</figure>
He said that for OpenAI to survive beyond 2026, the company would need to raise more funding than any startup in history. 
Zitron’s comments came following recent reports that OpenAI <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/openai-could-lose-5b-this-year-and-run-out-of-cash-in-12-months-report" rel="null" target="null" text="null">could lose as much as $5 billion</a> in 2024, putting the company at risk of running out of cash within 12 months.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/nvidia-q2-revenue-beats-meets-misses-expectations-in-blow-boost-to-ai-sector" rel="null" target="null" text="null">Nvidia Q2 revenue beats expectations in record-setting boost to AI sector</a>
It’s important to note that OpenAI investors don’t own any private equity, as the startup is technically <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/open-ai-artificial-intelligence-for-profit" rel="null" target="null" text="null">still a nonprofit organization</a>. 
However, investors instead put their money in a for-profit subsidiary of OpenAI (OpenAI LP) and are then entitled to a share of that entity’s profits once it reaches a pre-determined cap. 
The news of a potential new funding round comes amid an increasingly competitive landscape for AI companies.&nbsp;
Google has spent billions launching its <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/google-gemini-ai-model-dominates-benchmarks-beats-gpt-4o-claude-3" rel="null" target="null" text="null">own AI product Gemini</a>, the latest version of its chatbot assistant originally known as Bard.&nbsp;
Google and Amazon have <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/amazon-invests-4-billion-anthropic-ai-startup" rel="null" target="null" text="null">invested a combined $6 billion</a> into another AI company called Anthropic, which is behind <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/anthropic-s-artifacts-ai-conversations-useful-documents" rel="null" target="null" text="null">the chatbot Claude</a>. Another competitor, Meta, is behind Meta AI, which uses its own open-source large language model, Llama 3.1. 
AI Eye: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/ai-drone-hellscape-plan-for-taiwan-llms-too-dumb-to-destroy-humanity-ai-eye/" rel="null" target="null" text="null">AI drone ‘hellscape’ plan for Taiwan, LLMs too dumb to destroy humanity</a>

OpenAI in talks to raise funds at over $100B valuation: Report

Table of Contents

Cointelegraph

Other articles published on Aug 29, 2024

“STO SUMMIT 2024 Tokyo: Shaping the Future of Asset Tokenization”

Ripple’s XRP Looks Primed for Q4 Surge: These Indicators Strengthen Bullish Price Outlook

Whales Offload 1.16 Trillion $PEPE As Pepe Unchained Raises $11 Million In ICO

io.net Partners with FLock.io to Launch First-Ever Proof-of-AI

Network Activity Decline for Polygon (MATIC) but Bullish Reversal Signals Emerge

Jupiter DEX integrated Pump.fun and Moonshot

Join our free newsletter for daily crypto updates!