OpenAI Cuts Funding Target to $20 Billion Amid AI Market Selloff
OpenAI lowers its funding goal and valuation as investors pull back and the company shelves its IPO plans.
KEY POINTS
- OpenAI cuts funding target from $30 billion to $20 billion
- Valuation drops from $1.4 trillion to $1.25 trillion
- Investor commitments declined amid an AI market selloff
- UAE consortium including MGX expected to be the largest backer
- OpenAI has shelved its IPO plans for now
OpenAI has reduced the target for its latest funding round by $10 billion to $20 billion, according to The Financial Times. The company is now aiming for a valuation of $1.25 trillion, down from $1.4 trillion, a decrease of $150 billion.
Some investors have reduced the amounts they planned to contribute amid an AI stock selloff. The deadline for binding commitments passed on Friday, and the first close could fall below the new $20 billion target.
“Given everything happening with safety, right now would be an ill-advised moment to go public.”
The largest backer is expected to be a consortium from the United Arab Emirates, including the state-backed tech fund MGX. In return, OpenAI will have the option to lease newly built computing capacity in the region.
Other participants include Founders Fund, Coatue, Sequoia Capital, Andreessen Horowitz, and Masayoshi Son’s SoftBank. Wealthy individuals may also be offered a chance to invest at the same valuation.
In March, OpenAI raised $122 billion at a valuation of $852 billion from investors including Amazon, SoftBank and Nvidia. The company plans to spend many times that amount on computing power to train and run its models.
The new round is intended as a bridge because OpenAI has shelved its initial public offering for now. CEO Sam Altman ruled out going public this year, citing safety concerns and calling it an ill-advised moment.
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