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 as reported by Reuters.
- • The desired valuation has fallen to $1.25 trillion from $1.4 trillion amid a tech selloff driven by AI spending concerns.
- • A UAE 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.
- • Venture firms Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are expected to participate, and wealthy individuals may invest in a later retail offering at the $1.25 trillion valuation.
- • The first close is expected to raise less than $20 billion after some investors reduced their allocations, as OpenAI pursues a 2027 listing and competes with Anthropic for a similar investor base.
Summary
OpenAI has slashed the target for its latest funding round by $10 billion, seeking about $20 billion, amid a selloff in technology stocks driven by worries over AI, the Financial Times reported on Friday, citing people with knowledge of the matter. Per the FT's account as relayed by Reuters, the desired valuation for the ChatGPT maker has dropped to $1.25 trillion from $1.4 trillion.
OpenAI set a Friday deadline for investors to commit to the round, but the first close is expected to raise less than $20 billion after some investors reduced their allocations. 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, the FT reported. Venture capital firms including 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 round comes as US tech stocks have suffered a rout over growing concerns about massive spending on AI. The tech-heavy Nasdaq index dropped 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, as the two companies are tapping a similar investor base, Reuters has reported. OpenAI, MGX, Coatue, Sequoia and Andreessen Horowitz did not immediately respond to requests for comment, and Founders Fund could not be reached.
OpenAI set a Friday deadline for investors to commit to the round, but the first close is expected to raise less than $20 billion after some investors reduced their allocations. 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, the FT reported. Venture capital firms including 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 round comes as US tech stocks have suffered a rout over growing concerns about massive spending on AI. The tech-heavy Nasdaq index dropped 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, as the two companies are tapping a similar investor base, Reuters has reported. OpenAI, MGX, Coatue, Sequoia and Andreessen Horowitz did not immediately respond to requests for comment, and Founders Fund could not be reached.
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