OpenAI seeks new financing with valuation potentially reaching $100 billion

Microsoft-backed artificial intelligence startup OpenAI, the creator of ChatGPT, is reportedly in discussions with investors for a new round of funding that could potentially value the company at or above $100 billion, solidifying OpenAI's position as one of the most valuable startups in the world.

According to sources familiar with the matter cited in the report, investors potentially participating in the new funding round are currently engaged in preliminary discussions with the company. The details of these discussions, such as terms, timing, and valuation, have yet to be finalized and may still change.

If the funding round materializes, it would make OpenAI the second-highest valued startup in the United States, second only to Elon Musk's Space Exploration Technologies Corp., according to data provided by CB Insights.

Bloomberg also reported that OpenAI is in discussions with Abu Dhabi-based fund G42 to raise funds for a new chip manufacturing company. It is currently unclear whether these negotiations are related to the broader funding round under discussion. However, reports suggest that OpenAI is discussing raising $8 billion to $10 billion from G42.

Last month, there were reports that OpenAI CEO Sam Altman is seeking funding for a chip manufacturing company called "Tigris." It is said that the CEO hopes to produce semiconductor chips that can compete with Nvidia Corp.'s dominant market position in graphics processing units (GPUs). The goal is to create a low-cost alternative to replace Nvidia's chips, which would help OpenAI reduce its ongoing costs of operating AI services.

Little is currently known about the proposed chip, but it is likely that the startup will create some form of custom tensor processing unit (TPU), as TPUs are believed to have the capability to surpass Nvidia's AI accelerators, despite their long and complex development timelines. It is said that many prominent venture capital firms, including some of OpenAI's earliest investors and Microsoft, have shown interest in Altman's chip venture.

OpenAI's existing relationship with G42 adds weight to this news. Abu Dhabi's G42 announced in October that it is partnering with OpenAI to provide "cutting-edge AI solutions" for the United Arab Emirates and regional markets.

In addition, OpenAI is reportedly close to completing a separate offer led by Thrive Capital that would allow its employees to sell their shares at an estimated valuation of around $86 billion.

OpenAI has already received significant funding, with its main supporter Microsoft committing to invest over $10 billion in the company in January last year. This came after the startup released its ChatGPT chatbot in November 2022, sparking a frenzy around generative AI.

OpenAI is not the only AI startup attracting millions of dollars in funding. Amazon and Google parent company Alphabet Inc. have made substantial investments in OpenAI competitor Anthropic PBC, while Salesforce recently led a $235 million investment in Hugging Face, bringing the company's valuation to $4.5 billion.