OpenAI is reportedly asking for less money than planned. The Financial Times reported on Friday, October 30, that the company has lowered the target for its new funding round from $30 billion to $20 billion, and the Wall Street Journal followed with more detail, according to TechCrunch. Several other outlets repeated the figures. OpenAI had not commented when these reports were published, so the numbers are as reported, not confirmed.
What changed. TechCrunch says the earlier target was $30 billion. The first close of the round is now expected to come in below $20 billion, and a later retail offering aimed at wealthy individuals could bring the total up to that level, according to the FT. The round is expected to be led by investors from the United Arab Emirates.
How much is in. The Wall Street Journal reports that OpenAI has secured about $11 billion so far. The WSJ also describes the response from some large investors as tepid. That would be a notable shift for a company that has been able to raise very large sums.
The valuation backdrop. Earlier reports put the valuation at $1.4 trillion on September 29 and then at $1.25 trillion on October 22, ahead of a planned IPO. TechCrunch’s article does not give a valuation for the lowered $20 billion target, so it is unclear whether the new target changes that figure.
Why investors may be cautious. TechCrunch says Wall Street investors have grown wary of heavy spending on AI infrastructure, which has contributed to a tech stock sell-off. The same article adds that a planned IPO by rival Anthropic could also face challenges. These are the article’s explanation of the mood, not a statement from OpenAI or its backers.
Why it matters. Training and running large AI models takes very large amounts of money for chips and data centers, and the AI industry has relied on investors continuing to fund that spending. A smaller raise, if confirmed, would suggest investors are being more selective, which could affect how fast AI companies expand and how they price their products. For readers in the US and UK, it is a signal to watch alongside the quarterly spending numbers from the big cloud companies.
What to watch. Look for an official statement from OpenAI, the size of the first close, whether the retail offering goes ahead, and any update on IPO timing.
Sources: TechCrunch, citing the Financial Times and the Wall Street Journal. Figures are as reported by those outlets. This is not investment advice.
Rear of a server rack at a data center (representative image), Wikimedia Commons, CC0
