OpenAI Secures $1.5 Billion Investment from SoftBank, Pushing Its Valuation to $157 Billion

Word on the StreetWednesday, Nov 27, 2024 4:00 am ET

1min read

OpenAI reportedly has secured an additional $1.5 billion investment from SoftBank Group, which will allow current and former employees to sell shares through a tender offer.

This investment follows OpenAI's recent $6.6 billion funding round and has pushed the company's valuation to $157 billion. Insiders say the deal was personally driven by SoftBank's founder and CEO, Masayoshi Son, and OpenAI employees must decide whether to participate in the tender offer by December 24th.

Analysts believe that SoftBank's investment in OpenAI aligns with the company's capital-intensive business model, fitting with SoftBank's strategy. Notably, in the previous funding round, SoftBank had already made a substantial investment of $500 million.

Previously, SoftBank has invested in companies such as Arm, Apple, Qualcomm, and Alibaba. Its Vision Fund 2 has recently invested in AI startups like Glean, Perplexity, and Poolside. SoftBank's two Vision Funds have invested in approximately 470 companies with total assets amounting to $160 billion.

However, even without SoftBank's financial support, OpenAI has easily raised billions of dollars in funding. Since launching ChatGPT, OpenAI has raised about $13 billion from Microsoft and completed a $6.6 billion funding round in October led by Thrive Capital, with participants including chipmaker Nvidia, among others.

The company has also secured a $4 billion revolving credit facility, bringing its total liquidity to over $10 billion. In September, OpenAI projected that it would achieve $3.7 billion in revenue for the year, with a loss of about $5 billion.

Additionally, the report states that the tender offer is unrelated to OpenAI's potential plan to restructure the company into a for-profit entity. The company expects to allow more such stock sales on the secondary market in the future and will need to tap the private market again based on investor demand and the capital-intensive nature of the business.

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