Key Takeaways
- • OpenAI has cut the target for its latest funding round by $10 billion to about $20 billion, according to the Financial Times, citing people with knowledge of the matter.
- • The desired valuation has fallen to $1.25 trillion from $1.4 trillion, amid a tech stock selloff driven by concerns over AI spending.
- • 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.
- • Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to participate, with a later retail offering planned at the $1.25 trillion valuation.
- • The Nasdaq fell 2.9% on Friday and is down 7.8% from its October 6 closing high; OpenAI is pursuing a 2027 listing.
Summary
OpenAI has reduced the target for its latest funding round by $10 billion amid a selloff in technology stocks driven by worries over heavy 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 dropped to $1.25 trillion from $1.4 trillion, according to the report.
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, 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, the newspaper reported. Venture capital firms Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part. Wealthy individuals will be able to invest in a subsequent retail offering at the $1.25 trillion valuation, the FT said.
The move comes as US technology stocks have sold off on growing concern about massive AI infrastructure spending. 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. Reuters has reported that OpenAI, which is pursuing a listing in 2027, has been eager to close the round partly to get ahead of Anthropic's imminent listing, as the two companies are tapping a similar investor base. OpenAI, MGX, Coatue, Sequoia 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, but 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, the newspaper reported. Venture capital firms Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part. Wealthy individuals will be able to invest in a subsequent retail offering at the $1.25 trillion valuation, the FT said.
The move comes as US technology stocks have sold off on growing concern about massive AI infrastructure spending. 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. Reuters has reported that OpenAI, which is pursuing a listing in 2027, has been eager to close the round partly to get ahead of Anthropic's imminent listing, as the two companies are tapping a similar investor base. OpenAI, MGX, Coatue, Sequoia and Andreessen Horowitz did not immediately respond to Reuters requests for comment, and Founders Fund could not be reached for comment.
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