OpenAI, backed by Microsoft, valued at $80bn post-deal
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The company intends to sell its current shares in a ‘tender offer’ led by venture firm Thrive Capital, in a deal similar to one from early last year
According to the New York Times, OpenAI, backed by Microsoft, has finalized a deal that values the AI company at $80 billion or higher. The deal involves selling existing shares in a tender offer led by venture firm Thrive Capital. This approach allows employees to cash out their shares instead of a conventional funding round, which would raise capital for the business.
OpenAI has not yet responded to a request for comment.
The AI company entered into a comparable agreement in early 2023. Venture capital firms Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global agreed to purchase OpenAI shares in a tender offer, valuing the company at approximately $29 billion. OpenAI has secured significant funding rounds, including Microsoft’s $10 billion investment in January 2023. The company also provided funding for OpenAI in 2019 and 2021.
The introduction of OpenAI’s ChatGPT in late 2022 has generated excitement around AI, prompting companies to explore ways to leverage the technology. AI has been integrated into various products, including Microsoft’s Bing search engine, as the company continues to advance its own developments. On Thursday, OpenAI unveiled Sora, a tool capable of generating videos from text prompts. The day before, it announced its experimentation with enhancing ChatGPT’s memory to enable the tool to recall more user conversations.
OpenAI CEO Sam Altman has reportedly been in discussions to acquire a chip manufacturer or otherwise enhance the company’s access to the costly artificial intelligence chips its tools require.
This latest deal represents the largest investment in the company since a brief period of turmoil in late 2023, during which Altman was dismissed by the board before being reinstated following outcry from employees.
The substantial investments in OpenAI have drawn regulatory scrutiny. European Commission officials announced in early January that they would examine whether Microsoft’s support raises antitrust issues. Similarly, on January 24, the Federal Trade Commission in the US stated that it was investigating whether investments from Microsoft, Google, and Amazon in AI companies, including OpenAI, could be detrimental to competition.
