Artificial intelligence start-up company OpenAI raised $40 billion U.S. in what’s being called the largest private funding round on record.
The $40 billion U.S. is nearly three times more than had been previously raised by a private technology company, according to data from PitchBook.
The largest private deal prior to OpenAI’s latest round was Ant Group’s $14 billion U.S. capital raise in 2018.
The latest funding round values the ChatGPT maker at $300 billion U.S. and puts OpenAI behind only SpaceX at $350 billion U.S. among the world’s most valuable private companies.
Japan’s SoftBank led the latest funding round with $30 billion U.S. It was joined by Microsoft (MSFT), which remains a core investor in OpenAI.
OpenAI said it plans use the money raised to “push the frontiers of A.I. research even further” and scale its compute infrastructure.
About $18 billion U.S. of the funding is expected to be used for OpenAI’s commitment to Stargate, the joint venture between SoftBank, OpenAI and Oracle (ORCL) that was announced by U.S. President Donald Trump in January.
The initial funding for OpenAI will be $10 billion U.S. immediately, followed by the remaining $30 billion U.S. by year’s end.
However, SoftBank said that its investment could be reduced to $20 billion U.S. if OpenAI doesn’t restructure into a for-profit business model by Dec. 31 of this year.
That caveat from SoftBank increases pressure on OpenAI to convert to a for-profit model as soon as possible.
The conversion requires the blessing of Microsoft and the California Attorney General, and has been challenged in court by Elon Musk, who runs the competing company xAI.
SoftBank and other investors are betting that ChatGPT’s rapid growth will continue. OpenAI says that ChatGPT now has 500 million weekly users, up from 400 million in February this year.
OpenAI recently said that it expects that its revenue will triple to $12.70 billion U.S. by the end of 2025.
