Key Takeaways
- • OpenAI has cut the target for its latest funding round by $10 billion, now seeking about $20 billion, according to the Financial Times citing people with knowledge of the matter.
- • The desired valuation has dropped to $1.25 trillion from $1.4 trillion, reflecting a selloff in tech stocks driven by AI spending concerns.
- • A UAE investor consortium including state-backed MGX is expected to be the largest participant, with OpenAI gaining an option to lease newly developed computing capacity in the region.
- • Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are expected to participate, and the first close may come in below $20 billion as some investors reduced allocations.
- • OpenAI is pursuing a listing in 2027 and wants to close the round partly to get ahead of Anthropic's imminent listing, as both companies tap a similar investor base.
Summary
OpenAI has reduced the target for its latest funding round by $10 billion amid a selloff in US technology stocks tied to growing worries over massive AI spending, the Financial Times reported on Friday, citing people with knowledge of the matter. The ChatGPT maker is now seeking about $20 billion, and its desired valuation has fallen to $1.25 trillion from $1.4 trillion, according to the report.
OpenAI set a Friday deadline for investors to commit to the round. The first close is expected to raise less than $20 billion after some investors reduced their allocations, the FT added. A consortium of UAE investors that includes state-backed technology fund MGX is expected to be the largest participant. As part of that arrangement, OpenAI would gain the option to lease newly developed computing capacity in the region. Venture capital firms Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part. Wealthy individuals will have the option to invest in a subsequent retail offering at the $1.25 trillion valuation, the FT reported.
The funding effort comes as US tech stocks have sold off. The tech-heavy Nasdaq index fell 2.9% on Friday and is down 7.8% from its all-time closing high reached on October 6. OpenAI, which is pursuing a listing in 2027, has been keen to close the round partly to get ahead of Anthropic's imminent listing, according to Reuters, as the two companies are tapping a similar investor base. OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to Reuters requests for comment, and Founders Fund could not be reached for comment.
OpenAI set a Friday deadline for investors to commit to the round. The first close is expected to raise less than $20 billion after some investors reduced their allocations, the FT added. A consortium of UAE investors that includes state-backed technology fund MGX is expected to be the largest participant. As part of that arrangement, OpenAI would gain the option to lease newly developed computing capacity in the region. Venture capital firms Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part. Wealthy individuals will have the option to invest in a subsequent retail offering at the $1.25 trillion valuation, the FT reported.
The funding effort comes as US tech stocks have sold off. The tech-heavy Nasdaq index fell 2.9% on Friday and is down 7.8% from its all-time closing high reached on October 6. OpenAI, which is pursuing a listing in 2027, has been keen to close the round partly to get ahead of Anthropic's imminent listing, according to Reuters, as the two companies are tapping a similar investor base. OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to Reuters requests for comment, and Founders Fund could not be reached for comment.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.