OpenAI’s desperate funding race

OpenAI is reportedly in talks with Venture Capitalist firms to raise the largest amount it’s raised since Microsoft (which owns a 49% stake in the company) invested $13B in January 2023. The funding raise values the company at over $100B, which is significantly higher than February’s $86B valuation, which was discovered after OpenAI employees were allowed to sell their stakes in the company.    

According to reports, Thrive Capital has agreed to invest $1B, with Microsoft and OpenAI’s previous backers—including Khosla Ventures, Infosys, and Y Combinator—also expected to contribute. 

According to experts, OpenAI’s business model is “untenable”, the company is on course to lose nearly $5B by the end of the year—it makes an annualized revenue of $3.4B, but has spent $8.5B on AI training and staff—and it will not make it to 2026 if it doesn’t raise more capital than any other start-up has ever raised. 

This could explain why they have been in talks with VCs, since December.