The maker of ChatGPT, OpenAI, announced on Wednesday that it raised $6.6 billion in venture capital investments, marking a larger departure from its nonprofit beginnings.
Tech behemoths Microsoft, Nvidia, and SoftBank supported the investment round, headed by venture capital company Thrive Capital, according to a person with knowledge of the funding who was not permitted to discuss it publicly.
According to venture capital investment tracker PitchBook, the investment is among the largest fundraising rounds in American history and the largest in the previous 17 years without funding from a single well-funded company.
Microsoft boosted OpenAI last year with a $10 billion investment in exchange for a significant share of the business’s future expansion, following in the footsteps of tobacco giant Altria Group, which in 2018 invested $12.8 billion in the now-discredited vaping startup Juul.
“We will be able to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems,” according to OpenAI, about the new financing.
According to the corporation, the money will “accelerate progress on our mission” and give it a market worth of $157 billion.
The flood of money comes as OpenAI has been aiming to more fully transition itself from a nonprofit research center into a for-profit corporation beholden to shareholders.
Laptops 1000The majority of the employees at San Francisco-based OpenAI work in its quickly expanding for-profit division, but the company is still governed by a nonprofit board of directors whose goal is to advance humankind by safely creating futuristic artificial intelligence that is capable of performing tasks more effectively than humans.
That imposes constraints on how much profit it produces and how much shareholders get in return for pricey investments into the computing power, specialist AI chips, and computer scientists it takes to construct generative AI tools.
However, if the board carries through with its intention to become a public-benefit corporation—a kind of business entity that aims to improve society in addition to making money—the governance structure would be altered.
Khosla Ventures, Altimeter Capital, Fidelity Management and Research Company, MGX, ARK Invest, and Tiger Global Management are among the investors in addition to Thrive Capital.
In a succinct statement on Wednesday, Microsoft expressed its excitement about carrying on with its OpenAI collaboration.
Leading chip maker Nvidia, which creates the hardware needed to create and operate AI systems, declined to comment. Each funder’s investment amount has not been made public.
Apple is not a part of this round, despite rumors that it may become more involved in OpenAI’s future given that it recently collaborated with the business to include ChatGPT into its products.
Although OpenAI has extensive access to processing capacity due to its tight collaboration with Microsoft, according to PitchBook analyst Brendan Burke, the company still “needs follow-on funding to expand model training efforts and build proprietary products.”
According to Burke, it will also enable it to compete with rivals like Elon Musk’s business xAI, which raised $6 billion in funding and is developing specialized data centers including one in Memphis, Tennessee.
Musk, who contributed to funding OpenAI’s initial years as a charity, has become a harsh opponent of the business’s commercialization.
