OpenAI Raises $11 Billion in First Close at $1.25 Trillion Valuation, Below Earlier Ask

The close leaves OpenAI well short of the round it set out to raise. The company first sought $30 billion or more at a valuation of about $1.4 trillion, according to earlier press reports. People familiar with the deal now expect the round to reach about $20 billion in total in the coming weeks, so roughly $9 billion is still to close. Bloomberg tied the smaller ambitions to the selloff in AI stocks, investor doubts about the scale of infrastructure spending, and possible obstacles to data centre construction after the US midterm elections.

The pricing still puts OpenAI ahead of its last raise. In March the company raised $122 billion at an $852 billion valuation. The new figure is about 47% higher, although reports differ on whether $1.25 trillion is a pre-money or post-money number, which affects the exact step-up.

OpenAI declined to comment on the funding, according to 24/7 Wall St. The company has not disclosed lead investors, terms or how it plans to use the money.

The CFO's Account

Chief financial officer Sarah Friar confirmed the $1.25 trillion figure in a television interview, describing it as a pre-money valuation, 24/7 Wall St reported. She said the price was almost 50% above the March round, and pushed back on the reported $1.4 trillion starting point, saying that number originated in a media report rather than with OpenAI. Two investors had put the initial ask even higher, at $1.5 trillion, according to the same report.

Friar gave no revenue figures in the interview but said OpenAI's business grew 70% from the second quarter to the third, that its enterprise business had doubled and that revenue is now split roughly evenly between consumers and companies. She cited 1.2 billion weekly ChatGPT users and an advertising run rate of $1 billion by August. Asked about the election, she said: "The demand for AI is real."

Axios reported in September that OpenAI's annualised revenue run rate was close to $70 billion. The company has not published its costs.

Gulf Money in the Round

SoftBank and MGX, the Abu Dhabi state-backed technology investor, took part in the opening close, 24/7 Wall St reported. Earlier reporting by CNBC, cited by Tech Funding News, said UAE investors and Coatue were leading the round and that MGX was expected to be the largest single participant, with Founders Fund, Sequoia Capital and Andreessen Horowitz also expected to join. Bloomberg's report did not name the investors in the first tranche.

MGX's role makes the round one of the largest single exposures of Gulf capital to a private AI company. Abu Dhabi has also tied itself to OpenAI operationally: earlier this month the emirate's government signed agreements with the company covering public services and education, including a project to run OpenAI models on infrastructure inside the UAE.

For SoftBank, the round adds to an already large OpenAI position. The Japanese group reports July-September results on Tuesday, with investors questioning its debt and the size of its bet on OpenAI after a sharp fall in its shares.

The Listing Question

The raise follows OpenAI's decision to postpone plans for an initial public offering. The company has filed confidentially for a US listing, and The New York Times has reported that it is weighing a delay to 2027 rather than going public below $1 trillion.

Its closest rival is heading the other way. Anthropic filed its S-1 on October 26 for a Nasdaq listing under the ticker ANT and plans to list in mid-November. Some investors now value it at about $1.5 trillion, down from earlier expectations of about $2 trillion, according to 24/7 Wall St. How Anthropic's shares are priced and trade will be the first public-market test of the valuations investors are now paying for OpenAI's remaining $9 billion.