{"id":134297,"date":"2024-09-14T05:10:19","date_gmt":"2024-09-14T05:10:19","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/09\/14\/what-openais-stunning-150-billion-valuation-could-hinge-on\/"},"modified":"2024-09-14T05:10:20","modified_gmt":"2024-09-14T05:10:20","slug":"what-openais-stunning-150-billion-valuation-could-hinge-on","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/09\/14\/what-openais-stunning-150-billion-valuation-could-hinge-on\/","title":{"rendered":"What OpenAI’s Stunning $150 Billion Valuation Could Hinge On"},"content":{"rendered":"
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OpenAI’s<\/a> new financing round is expected to come in the form of convertible notes, according to sources with direct knowledge of the matter, who said its $150 billion valuation will be contingent on whether the ChatGPT-maker<\/a> can upend its corporate structure and remove a profit cap for investors.<\/p>\n

The details of the conditions of the $6.5 billion funding, which have not been previously reported, show how far OpenAI, the most valuable AI startup in the world, has come from a research-based non-profit, and the structural changes it’s willing to make to attract ever more investment to fund its expensive pursuit of artificial general intelligence (AGI), or AI that surpasses human intelligence.<\/p>\n

The outsized funding round has seen strong investor demand and could be finalized in the next two weeks, given the rapid growth of OpenAI’s revenue, sources added.<\/p>\n

Existing investors such as Thrive Capital, Khosla Ventures, as well as Microsoft<\/a> are expected to participate. New investors including Nvidia and Apple also plan to invest. Sequoia Capital is also in talks to come back as a returning investor.<\/p>\n

If the restructuring is unsuccessful, OpenAI would need to renegotiate its valuation with investors at which their shares will be converted, likely at a lower number, sources told Reuters, who requested anonymity to discuss private matters.<\/p>\n

OpenAI declined to comment.<\/p>\n

The removal of the profit cap would require approval from OpenAI’s non-profit board, consisting of Chief Executive Sam Altman<\/a>, entrepreneur Bret Taylor and seven other members.<\/p>\n

The company has also held discussions with lawyers about turning its non-profit structure to a for-profit benefit corporation, similar to what its rivals such as Anthropic<\/a> and xAI<\/a> are using, sources added, confirming media reports.<\/p>\n

It is unclear if such fundamental corporate structural changes could happen. The removal of the profit cap, which put a limit on investors’ potential returns in OpenAI’s for-profit subsidiary, would hand early investors an even bigger win.<\/p>\n

It could also raise questions about OpenAI’s governance and departure from its non-profit mission. OpenAI has said the cap was put in place to “incentivize them to research, develop, and deploy AGI in a way that balances commerciality with safety and sustainability, rather than focusing on pure profit-maximization.”<\/p>\n

The San Francisco-based AI lab, founded in 2015 as a nonprofit research project, with the goal of building AI for the benefit of humanity, is currently controlled by a non-profit parent organization.<\/p>\n

It has accelerated its commercialization efforts by selling subscription-based services like ChatGPT to consumers and enterprises, which now boasts over 200 million users.<\/p>\n

Existing investors are beholden to a capped limit to their return on investment, with any additional returns to be routed to the non-profit.<\/p>\n

Returns were capped at 100x the investment for investors in OpenAI’s first round of financing. \u201cWe expect this multiple to be lower for future rounds,\u201d the company said in a 2019 blog post detailing the structure.<\/p>\n

OpenAI used this model to raise more than $10 billion in recent years, with the majority coming from Microsoft. It was last valued at $80 billion in February in a tender offer deal where the company sold existing shares led by Thrive Capital.<\/p>\n

\u00a9 Thomson Reuters 2024<\/em><\/p>\n

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)<\/i><\/p>\n<\/div>\n


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