OpenAI closes $10B funding round at $27B-29B valuation.


OpenAI, the startup behind the widely used conversational AI model ChatGPT, has closed its latest funding round of more than $10.3 billion, TechCrunch has learned.

VC firms including Tiger Global, Sequoia Capital, Andreessen Horowitz, Thrive and K2 Global are among the filings seen by TechCrunch. The source told us that the Founders Fund is also investing. In total, VCs raised more than $300 million at a valuation of $27 billion to $29 billion. This comes alongside a larger investment from Microsoft announced earlier this year, a person familiar with the development told TechCrunch. Microsoft’s investment is believed to be around $10 billion, a figure we have confirmed with our sources.

If all this is correct, this is the closing of the round, as reported by The Wall Street Journal in January. We found that to be the case when discussions began as he expressed a keen interest in OpenAI and its business.

While Microsoft’s investment comes with a strong strategic angle — the tech giant is working to integrate OpenAI technology across a range of operations — the VCs are coming in as financial backers.

As far as we can tell, the word sheets were signed by the investors and the money was transferred; Still coming from OpenAI signing. The investment was scheduled to be made public next week.

Overall, foreign investors now own more than 30% of OpenAI.

According to PitchBook data, Peter Thiel was already a supporter but it seems for the first time that the founders will invest in the fund; K2 Global, a single-partner firm, Ozzy Amanat, and Trive are early backers of the startup. According to Pitchbook information, Sequoia, a16z and Tiger Global were previously investors in the company but sold shares. This latest investment will bring them back.

Several companies in the technology sector, including Tiger and Sequoia, have faced some difficulties due to the financial crisis last year. In general, many VCs have significantly reduced their investment pace, sitting on so-called “dry powder” and waiting for a better climate and possibly better opportunities.

So at a time when investors are on the lookout for exciting AI startups to back, OpenAI is perhaps the most promising opportunity right now.

“They are probably trying to take advantage of this [funding] To say, hey, look, we got a golden apple,” a source said of the decision to support OpenAI here and now. “Venture is a very strange place where anything can happen. You can always go for big break again.

OpenAI has an army of technical teams working in different areas, but one area that has gotten a lot of attention of late is GPT, short for generative pre-trained transformer, which is the OpenAI family of large language models used by third parties. The way of APIs.

Based on GPT in November 2022, OpenAI released ChatGPT, a generative AI service that allows anyone to type a natural question and get an accurate and detailed answer. ChatGPT is a proven success, with more than 1 billion visitors to its website in February, SimilarWeb says — and that doesn’t include those using that technology through third parties.

Generative AI is all the rage right now, but OpenAI has its share of controversies, too, with many focused on that buzz and consumer-oriented ChatGPT product. People have questioned whether it is a hoax, a “virus,” how it treats privacy, whether it is poisonous or defamatory. And with so many rushing into AI development, the nature of how OpenAI’s GPT branding will last longer has even come up for discussion.

In all fairness, OpenAI acknowledges work still needs to be done, and in the meantime continues to develop and iterate on services. In February, the startup introduced a paid version of ChatGPT called ChatGPT Plus with a faster user experience. Revised in March by Multimodal LLM GPT-4.

Key to the proposition, OpenAI’s valuation and investor interest is that alongside the technology itself, there is a rapidly growing ecosystem around the technology.

In addition to the hundreds of millions of people who have played around with ChatGPT, hundreds of large and small businesses have begun deploying GPT and ChatGPT into their products and services. And that fills other big tech companies to accelerate their own efforts in generative AI. Google introduced LLMA to take on Bard and Meta GPT with LLM owning it.

OpenAI, however, has an undeniable gravitas among the competition due to its singular focus on the AI ​​space since its inception in 2015. That’s just as it’s undergone some significant changes — including a shift from its original nonprofit model. we don’t have Really Find out if AI is driving the seismic shift that many say it will be, but as one person put it: OpenAI may be the closest thing we have to a winner in the space right now.

“We’ve been working on it for a long time, but it’s slowly becoming more likely that it will actually work,” founder and CEO Sam Altman said at an AI conference earlier this month. “We were. [building] The company for seven years. These things take a long, long time. I’ll say broadly why it worked when others didn’t: It’s because we’ve been sweating every detail for a long time. And most people are not willing to do that.

In addition to ChatGPT, OpenAI also has an AI-based image-generation tool called Dall-E that received a significant update in July last year. It also has speech recognition model Whisper AI.

Microsoft’s efforts include integrating OpenAI’s APIs with Azure infrastructure to support the models’ computational requirements. It also announced GPT-4 integration for premium Bing in March, part of Microsoft’s ongoing effort to dominate Google’s search services.

We’ve reached out to the investors named here, as well as OpenAI, for comment and will update this story when we learn more.


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