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OpenAI is discussing the possibility of selling a stake, a move that would value the company at $80 billion to $90 billion, the Wall Street Journal reported, citing people familiar with the matter.
The deal is expected to allow employees to sell existing shares, rather than the company issuing new shares to raise additional capital. Once the share sale is completed, the transaction will be OpenAI's second major share sale.
In April this year, OpenAI received more than $300 million in funding from institutions such as Sequoia Capital, Andreessen Horowitz, Thrive, and K2 Global, and was valued at around $29 billion at the time. In just half a year, the company's valuation nearly tripled.
If the valuation of more than $80 billion is true, this will make OpenAI the third most valuable "startup company" in the world, second only to SpaceX and ByteDance.
The turning point brought by ChatGPT
Since ChatGPT debuted in late 2022, there has been a new wave of entrepreneurship in the AI field.
ChatGPT allows anyone to generate articles, poems, and summaries based on simple text-based prompts. OpenAI revealed that ChatGPT received more than 1 million registrations within five days of its release, and two months after its release, active users had exceeded 100 million.
On March 14, 2023, OpenAI released GPT-4, which achieved "far ahead" at the technical level, and there is still no competing product of comparable level. Yesterday, OpenAI also added multi-modal capabilities of "listening" and "seeing" to ChatGPT.
In addition to ChatGPT, OpenAI also has the AI-based image generation tool DALL・E, which recently completed its third iteration, and the speech recognition model Whisper AI.
This popularity has also made OpenAI one of the most valuable startups in the world. Currently, OpenAI's commercial revenue mainly comes from individual user payments for ChatGPT Plus and revenue from enterprise-level services.
OpenAI said in late August this year that it expected revenue to reach $1 billion in 2023, which means it will generate more than $80 million in revenue every month in 2023.
What makes the contrast too stark is that OpenAI's full-year revenue in 2022 was only US$28 million, while its losses were as high as US$540 million.
As a high-profile startup, OpenAI has chosen to conduct regular private share sales during this phase, meaning both employees and existing investors will profit from the rising value of the company's equity.
From nonprofit to “most valuable startup”
Back when it was founded in 2015, OpenAI was a non-profit organization and promised to "collaborate freely" with other institutions and researchers by opening its patents and research results to the public.
OpenAI was co-founded by Ilya Sutskever, Greg Brockman, Trevor Blackwell, Vicki Cheung, Andrej Karpathy, Durk Kingma, Jessica Livingston, John Schulman, Pamela Vagata and Wojciech Zaremba, with Sam Altman and Elon Musk serving as initial board members.
According to a report from TechCrunch, OpenAI's initial financial status was vague, with Musk being its largest funder and another donor, YC Research, appearing to not contribute any money at all.
In 2019, OpenAI announced its transformation from a non-profit organization to a "caped-profit" company, a model that allows its for-profit subsidiary OpenAI LP to legally attract investment from venture funds, in addition to granting employees shares in the company.
Microsoft is the largest investor in OpenAI, with its current shareholding ratio reaching 49%. This share sale will also bring huge returns to Microsoft.
Microsoft provided a US$1 billion investment in OpenAI in 2019 and provided computing power with Microsoft Azure cloud computing service. In addition, Microsoft also announced a huge investment in OpenAI in January this year, with an investment scale of approximately US$10 billion, which will be used to develop new products and AI model training.
Behind the large investment represents Microsoft's hope: the company is integrating OpenAI's technology into multiple areas of its business, including Bing and Office Family Bucket, to challenge Google.
In June of this year, OpenAI co-founder and CEO Sam Altman also stated that the company would not go public at this time. One consideration is that when developing AI, decisions may be made that public market investors consider very strange.
But this does not affect investors' interest in OpenAI. Facing the emerging wave of large models and the ecosystem derived from them, an era has clearly begun.
