OpenAI Funding Update

By Krystal Hu and Kenrick Cai

(Reuters) – Thrive Capital is investing over $1 billion in OpenAI’s current $6.5 billion fundraising round. Unique among investors, it has the option to invest another $1 billion next year at the same valuation if OpenAI meets a revenue target, sources revealed.

OpenAI forecasts revenue to soar to $11.6 billion in 2025 from an estimated $3.7 billion in 2024, despite potential losses of up to $5 billion this year due to high spending on computing.

This funding round, structured as convertible debt, could close within a week and might value OpenAI at $150 billion, solidifying its position as one of the most valuable private firms globally.

The valuation hinges on a complex restructuring process to eliminate control from its non-profit board and remove investment return caps. There is currently no definitive timeline for this conversion.

Thrive Capital, which led OpenAI’s previous funding round, is contributing $1.2 billion through its own fund and a special vehicle for smaller investors. Other participants include Microsoft, Apple, Nvidia, and Khosla Ventures; however, they do not have the same future investment option.

If OpenAI’s valuation continues to rise, Thrive could potentially enhance its stake next year at a lower cost.

Details on the specific revenue target for Thrive’s option remain unclear. Both Thrive and OpenAI chose not to comment on the matter.

OpenAI’s revenue expectations significantly exceed CEO Sam Altman’s previous estimate of $1 billion this year, with main revenue streams from corporate services and subscriptions for its chatbot.

The flagship product, ChatGPT, is projected to generate $2.7 billion this year, a substantial increase from $700 million in 2023. The chatbot service, priced at $20 monthly, currently has around 10 million paying users.

Financial details regarding Thrive’s investment options were initially reported by the New York Times.