OpenAI nears historic $40 billion funding round, pushing valuation to $300 billion: Report
OpenAI is close to finalizing a $40 billion funding round led by SoftBank Group Corp., with key investors such as Magnetar Capital, Coatue Management, Founders Fund, and Altimeter Capital Management in discussions to participate, according to sources familiar with the matter, Bloomberg reported.
Magnetar Capital, an Evanston, Illinois-based hedge fund, could contribute up to $1 billion, as revealed by multiple sources requesting anonymity.
Investment breakdown
Data from research firm PitchBook indicates that this funding round would be the largest ever, placing OpenAI’s valuation at $300 billion when including the new capital—a near doubling from its previous valuation of $157 billion during its October fundraising round.
Under the terms of the deal, SoftBank is set to invest an initial $7.5 billion, supported by an additional $2.5 billion from an investor syndicate.
A subsequent tranche of $30 billion is expected later this year, comprising $22.5 billion from SoftBank and $7.5 billion from the syndicate.
Market reaction and corporate impact
Following the announcement, OpenAI’s shares fell by as much as 4.7% in Tokyo, and the company’s credit default swaps widened amid concerns regarding the financial impact of such a significant expenditure, according to the Bloomberg report.
SoftBank declined to comment on the matter.
The Japanese conglomerate has also separately committed billions to the Stargate Project—a joint venture with partners including OpenAI, Oracle Corp., and MGX.
Investor sentiment and future outlook
Representatives from OpenAI, Magnetar, and Founders Fund have chosen not to comment, while Coatue and Altimeter did not respond to inquiries, said the report.
This substantial funding round highlights the robust investor enthusiasm for OpenAI, a company experiencing rapid growth alongside the global adoption of AI technologies.
OpenAI projects its revenue to more than triple to $12.7 billion this year, up from $3.7 billion last year, and expects sales to more than double to $29.4 billion next year, according to the Bloomberg report.
However, the company faces high operational costs related to chips, data centers, and talent acquisition, and it does not anticipate becoming cash-flow positive until 2029, a year when revenue is projected to exceed $125 billion.
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