Discover the surprising moves behind OpenAI’s meteoric rise to a $150B valuation. This in-depth analysis explores the company’s strategic shift towards artificial general intelligence (AGI) and the implications for the future of ChatGPT and AI.
The individuals with firsthand knowledge of the situation have stated that convertible notes will likely be the form of OpenAI’s next round of funding. The sources further stated that the $150 billion value of the company will depend on the company’s ability to change its corporate structure as well as eliminate a profit cap for shareholders.
Unreported until now, the specifics regarding the $6.5 billion funding’s terms demonstrate how far OpenAI, the most highly valued AI startup globally, has come from a based-on research non-profit and the structural adjustments it is prepared to make in order to draw even more capital for its costly quest about artificially intelligent general intelligence (AGI), as well as artificial intelligence (AI) that outperforms human intelligence.
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Given the explosive growth in OpenAI’s revenue, the next financing round is expected to be completed in a matter of weeks due to considerable investor interest, according to further sources.
It is anticipated that current investors including Microsoft (NASDAQ: MSFT), Khosla Ventures, and Thrive Capital will take part. Apple (NASDAQ: AAPL) and Nvidia (NASDAQ: NVDA), two new investors, also intend to make investments. Talks are also on for Sequoia Capital to return as an investor.
OpenAI Set to Make Major Structural Adjustments for Next Funding Round
According to sources on condition of anonymity to talk about private affairs, OpenAI will have to reconsider its valuation with shareholders at which the shares will be transformed, perhaps at a lower number, if the reorganization fails.
In response to enquiries on funding and prospective modifications, OpenAI stated in an announcement that it will continue to collaborate with its non-profit organization to develop AI that helps all people.
The non-profit board of OpenAI, which is made up of businessman Bret Taylor, CEO Sam Altman, and seven other members, would need to approve the lifting of the profit cap. A representative for the business stated, “The charity is essential to our purpose and will still exist.”
According to insiders who confirmed media stories, the business has also had talks with lawyers about converting its non-profit organization to a for-profit advantage business, which is what its competitors like Anthropic and Xai use.
The feasibility of implementing such significant structural changes in corporations is uncertain. Early investors would benefit even more from the elimination of the earnings cap, which limited investors’ investment opportunities in OpenAI’s commercial subsidiary.
It might also prompt concerns about the administration of OpenAI and its divergence from its non-profit goals. The limit was imposed by OpenAI to “incentivize them to research, develop, as well as deploy AGI in a way that combines commercialism with safety and long-term viability rather than focusing on pure profit-maximization.”
Currently run by an independent parent organization, the San Francisco-based artificial intelligence lab was established in 2015 as an independent experimental initiative with the aim of developing AI for the good of humanity.
Sales of subscription-based services such as ChatGPT, which has over 200 million members, to businesses and consumers have expedited the company’s commercialization efforts. The return on investment of current investors is subject to a limitation, and any excess returns must go to the non-profit.
In OpenAI’s initial funding round, investors could only receive returns that were 100 times their initial investment. In a 2019 article outlining the structure, the company stated, “We expect these multiples to be less for future rounds.”
Using this technique, a type of AI has raised more than ten thousand million dollars in funding in the last few years, the majority of which has come from Microsoft. When the corporation sold its current shares in a tender offer managed by Thrive Capital in February, its last valuation was $80 billion.
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