OpenAI Raises New Funding to Hit $300 Billion Valuation

OpenAI hit a $300 billion valuation after completing its latest round of fundraising that was five times oversubscribed.

The ChatGPT maker snagged $8.3 billion months earlier than expected, according to The New York Times’ DealBook. The fundraise is part of the artificial intelligence startup’s plan to secure $40 billion in funding this year, to which SoftBank has pledged $30 billion.

The largest investor was Dragoneer Investment Group, which committed $2.8 billion. DealBook called it an “astonishing check” from a single venture fund that “may be one of the largest ever written.”

Dragoneer’s check represented about 10% of its total funds, the report said. Founded by former San Francisco Commissioner Marc Stad, Dragoneer has backed Airbnb, Spotify and DoorDash, among other investments.

New investors joining the round included private equity giants Blackstone and TPG, and mutual fund company T. Rowe Price. Other participants included several prominent venture capital funds, such as Founders Fund, Sequoia Capital and Andreessen Horowitz.

The influx of cash comes as OpenAI’s annual recurring revenue (ARR), the pace at which revenue is ramping up, has risen by 30% in one month. The company is now at $13 billion, up from $10 billion in June.

As such, ARR is expected to surpass $20 billion by year’s end.

Business subscribers to ChatGPT have grown to 5 million, up 67% from 3 million a few months ago, according to DealBook. Business users typically buy the more expensive subscriptions for enterprise use.

Overall, ChatGPT is the dominant AI chatbot in use, commanding 80% of all generative AI tool traffic as of May, according to Similarweb.

The funding comes at a time of sensitive discussions between OpenAI and Microsoft about their partnership going forward. Microsoft has committed $13 billion to OpenAI and was one of its earliest backers, but the AI startup has been outgrowing the relationship.

OpenAI is seeking to broaden access to its AI models and tap more computing power as demand grows. At present, Microsoft offers OpenAI’s AI models primarily on its Azure platform.

Microsoft also used to process OpenAI’s workloads exclusively, but this arrangement ended in January. In June, OpenAI tapped Google Cloud, Microsoft’s cloud rival, to help process more AI workloads.

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