OpenAI in talks for $30 billion bridge financing, valuation could reach $1.25 trillion
OpenAI is in talks with potential investors led by UAE investors for about $30 billion in financing at a valuation of $1.25 trillion, with Coatue expected to participate, and the funds will be used for continued investment ahead of its IPO. This round is far smaller than the $122 billion financing completed in March, when the post-money valuation was $852 billion. The report also says OpenAI is simultaneously discussing a separate commercial agreement to secure more computing power in the Middle East.
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The report provides the lead investor, valuation and timeline for this funding round, allowing readers to compare OpenAI's IPO pace with Anthropic's IPO progress.
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Artificial intelligence leader OpenAI Group PBC might have plans to go public in the near future, but it isn’t done with private funding rounds.
Indeed, it’s currently believed to be negotiating with investors an additional $30 billion investment that would bring its valuation to a staggering $1.25 trillion, which would make it the most valuable private company of all time.
A report in CNBC today said OpenAI is holding discussions with prospective backers from the United Arab Emirates, who will lead the new round, with the U.S. venture capital firm Coatue expected to participate too. The round is being positioned as an “opportunistic” bridge for OpenAI, to provide it with the capital it needs to continue investing in its business while finalizing plans for an initial public offering.
It’s believed that the UAE investors first approached OpenAI last month to propose another major funding round. Bloomberg reported on those initial talks last month, and now it appears that the discussions have reached an advanced stage. According to CNBC’s report, OpenAI hopes to get the investors to sign on the dotted line by the end of new week, even though the exact size of the investment has not yet been determined.
The proposed round is much smaller than OpenAI’s last major raise in March. Back then, the company raised a staggering $122 billion from investors including Amazon.com Inc., SoftBank Group Corp. and Nvidia Corp. at a post-money valuation of $852 billion. It was assumed at the time that the money would be enough to keep the company going until it could finalize the details of its long-awaited IPO, and it duly filed its confidential prospectus with the Securities and Exchange Commission in June in preparation for that.
For a while, it was assumed that OpenAI was looking to go public sometime this year, but the company now appears to have cooled on that idea. In August, Chief Financial Officer Sarah Friar told employees that OpenAI “will be a public company in 2027,” but less than a month later, Chief Executive Sam Altman appeared to backtrack, saying that he believes it would be “ill-advised” for the company to go public this year.
OpenAI’s change of plans has paved the way for its rival Anthropic PBC to beat it to the public markets. The creator of Claude is plotting its own massive IPO, and is reportedly seeking a valuation of between $1.5 trillion and $2.5 trillion. Its plans are thought to be much further along, and many believe it could be a public company in time for Thanksgiving.
In addition to the new investment, OpenAI is also reportedly discussing a separate commercial deal with the UAE investors that would give it access to more compute capacity in the Middle East.
Photo: OpenAI