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 dropped to $1.25 trillion from $1.4 trillion amid a tech stock selloff driven by AI spending worries.
- • The 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 the first close may raise less than $20 billion after some investors reduced allocations.
Summary
OpenAI has slashed the target for its latest funding round by $10 billion amid a selloff in technology stocks driven by concerns over AI, 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.
Venture capital firms including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to participate, according to the report. Wealthy individuals will have the option to invest in a subsequent retail offering at the $1.25 trillion valuation, the FT said.
The funding revision comes as US tech stocks have suffered a rout over growing worries about massive spending on AI. 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, as the two companies are tapping a similar investor base, Reuters has reported. OpenAI, MGX, Coatue, Sequoia Capital 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, 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 including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to participate, according to the report. Wealthy individuals will have the option to invest in a subsequent retail offering at the $1.25 trillion valuation, the FT said.
The funding revision comes as US tech stocks have suffered a rout over growing worries about massive spending on AI. 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, as the two companies are tapping a similar investor base, Reuters has reported. OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to requests for comment, and Founders Fund could not be reached.
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