The valuation of the A.I. startup surged by three times in under 10 months.
OpenAI recently concluded a transaction that values the artificial intelligence firm in San Francisco at $80 billion or more, marking a nearly threefold increase in its valuation within a span of less than 10 months, as reported by three individuals familiar with the matter.
As part of the deal, the company is set to offer existing shares in a tender offer facilitated by the venture capital entity Thrive Capital, enabling employees to liquidate their shares in the company instead of opting for a conventional funding round aimed at raising capital for operational purposes.
OpenAI, which chose not to provide a statement on the matter, now stands among the most valuable technology startups globally, trailing behind ByteDance and SpaceX, according to data from the research firm CB Insights.
This transaction exemplifies the trend in Silicon Valley where a select group of companies specializing in generative artificial intelligence, capable of independently producing text, sounds, and images, are attracting substantial investments. This funding surge commenced early last year following OpenAI’s introduction of the online chatbot ChatGPT, which captured widespread attention.
The development is significant for OpenAI as it signifies a vote of confidence at a crucial juncture, following a tumultuous year. In November, the company’s board ousted Sam Altman, its CEO, citing a loss of confidence in his leadership. The subsequent events led to a period of uncertainty, with employees considering mass resignations in support of Mr. Altman. Ultimately, he was reinstated, albeit accompanied by the resignation of several board members.
In an effort to address the turmoil from the previous year, OpenAI engaged the services of the legal firm WilmerHale to evaluate the board’s decisions and Mr. Altman’s leadership. The findings from WilmerHale’s investigation are anticipated to be disclosed early this year.
A comparable deal was struck by the company early last year when venture capital heavyweights such as Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global agreed to purchase OpenAI shares in a tender offer, valuing the firm at approximately $29 billion.
Investors are displaying a keen interest in injecting funds into artificial intelligence enterprises. Microsoft, for instance, made a \(10 billion investment in OpenAI in January, bringing its total investment in the San Francisco startup to \)13 billion.
Subsequently, Anthropic, a competitor of OpenAI, secured \(6 billion in funding from Google and Amazon. Cohere, a startup established by former Google researchers, raised \)270 million, pushing its total funding beyond \(440 million, while Inflection AI, founded by a former Google executive, closed a funding round of \)1.3 billion, elevating its total funding to $1.5 billion.
The completion of OpenAI’s latest deal seemed imminent in November, coinciding with Mr. Altman’s abrupt dismissal. During the ensuing week, the potential deal cast a shadow over Mr. Altman’s attempts to negotiate his return to the company. Prior to his reinstatement, more than 700 out of the company’s 770 employees signed a petition advocating for his reinstatement.
