OpenAI secures more than $6 billion from investors

Sometimes, there are extremely popular products that are, surprisingly, not turning a profit. This is why investors are crucial for some companies, otherwise, they wouldn’t exist. As popular as ChatGPT and DALL-E are, they’re not making any money for OpenAI. Well, OpenAI was able to secure another $6.6 billion during its latest round of funding.

The AI company isn’t quite making a profit from its AI services, but it’s on its way to doing so. The company expects to bring in about $3.7 billion by the end of the year, but it’s expected to burn through $5 billion. As such, the company reached out to investors to help dampen that financial hit. It looks like it hit its goal and then some.

OpenAI raised more than $6 billion in its latest funding round

Even though OpenAI’s popular products aren’t turning a profit, it doesn’t mean that they’re not a hit with investors. The company was able to seek funding with a $157 billion valuation, which is about 40x the company’s reported revenue. So, the investors have a ton of faith that the company will follow through with its restructuring.

This restructuring is the shift to being a for-profit company. OpenAI plans on becoming a for-profit company within the next two years. Currently, it has a pretty complicated non-profit structure.

Among the investors, there’s Thrive Capital. This firm contributed $1 billion. Strangely, there’s a special arrangement that will have Thrive Capital pump another $1 billion into OpenAI if the company meets its revenue goals. It was also rumored that Microsoft was going to invest another $1 billion.

One rather distasteful move that OpenAI pulled was asking investors not to back its competition like Anthropic and xAI. Not many companies do this, and we’re not sure if the investors honored its wishes. OpenAI doesn’t have control over who the investors can throw their money at, but it’s still a pretty shady move.

OpenAI plans to bring in a whopping $11.6 billion in revenue next year, and it will be on its way to being a for-profit company. It has its fingers crossed that it’d be able to reach its goals. If it can’t complete its transition to being a for-profit company in two years, the investors could ask for their money back.