OpenAI has lowered its latest funding target from $30 billion to about $20 billion

The Wall Street Journal subsequently disclosed that OpenAI has currently secured investment commitments of about $11 billion, less than half of its original target. The company has told shareholders that it will continue fundraising in the coming weeks, seeking to attract family offices and high-net-worth individuals. According to the Financial Times, OpenAI declined to comment.

First cutting the valuation, then slashing the fundraising target

According to the Financial Times, when OpenAI pitched this funding round to investors last month, it described it as the company's last opportunity to buy in before its IPO next year, and, backed by revenue that has grown at an accelerating pace since July of this year, set an asking valuation of $1.4 trillion.

But as negotiations progressed, the company successively lowered its asking valuation and its fundraising target. The Information reported that OpenAI last week first cut its proposed valuation to $1.25 trillion, and has now slashed its planned fundraising amount by $10 billion. The Financial Times also reported that some investment institutions reduced their subscription amounts; the company set the deadline for the first batch of investment commitments at local time October 30, and the first round of closing is expected to fall short of $20 billion.

And on March 31 of this year, OpenAI had just announced the completion of a funding round with as much as $122 billion in investment commitments, at a post-money valuation of $852 billion.

At present, a number of leading institutions are still in talks to follow on. According to the Financial Times, a consortium including MGX, a technology investment institution backed by the UAE government, is expected to become the largest contributor in this round; established institutions such as SoftBank, Sequoia Capital, Coatue, Founders Fund and Andreessen Horowitz (a16z) also plan to participate.

The investment is also directly tied to computing power supply. According to the above report, as part of the deal terms, OpenAI will obtain the option to rent newly built computing capacity in the UAE. For OpenAI, bringing in these investors not only replenishes its book cash but also helps broaden its future sources of computing power.

Wanting to lock in funds before Anthropic's IPO

Reuters reported on October 19 that the reason OpenAI is rushing to push forward this funding round is partly to lock in funds before its old rival Anthropic's IPO, which is expected in November. Because the two companies are approaching a similar group of investors, some institutions also interpret OpenAI's move as a "head start": gathering the money into its own bowl before funds flow to Anthropic's public listing.

Right now, Anthropic has already made its listing documents public, while OpenAI is still adjusting the price of its private fundraising. What the two giants are directly competing for is not just large-model users, but also investors' money and attention. For the same fund, whether to add to its OpenAI position inevitably has to be weighed against the opportunity to participate in Anthropic's new share offering.

At the same time, the wind in the secondary market has also changed. The Financial Times, citing an OpenAI investor, said that when this funding round was just launched, the market was still quite frenzied about AI investment, but the subsequent sharp downturn in tech stocks disrupted the rhythm. On local time October 30, the Nasdaq 100 index fell about 3.5% in a single day. The Wall Street Journal pointed out that investors are now becoming increasingly picky, and are much more cautious than before about which AI company to invest in and at what price to pay.

But OpenAI still needs to raise money for its massive computing power and infrastructure commitments. Reuters previously cited investors familiar with the company as saying that replenishing funds can also help the company buffer the risk that the secondary market cools and its originally planned 2027 IPO is forced to be further delayed. OpenAI said in its March funding announcement that continued access to computing power helps advance research, improve products, expand service coverage, and reduce the cost of providing services at scale.

OpenAI has also had precedents for raising money from wealthy individual investors. The company disclosed in March this year that individual investments attracted through bank channels exceeded $3 billion. The Financial Times said that OpenAI also plans to open subscriptions to high-net-worth individuals in the later stage of this round, continuing to raise funds at a valuation of $1.25 trillion, which could push the size of the entire funding round to about $20 billion.