OpenAI, the developer behind artificial intelligence bot ChatGPT, is in discussions to raise capital at a valuation of almost $30bn, according to two people familiar with the matter, as venture capitalists rush to profit from the viral technology.
The San Francisco-based company is talking to investment groups including Peter Thiel’s Founders Fund to carry out a tender offer of existing shares, in which investors would purchase OpenAI shares from current shareholders, including employees.
A deal would mark a surge in the company’s valuation from about $20bn in 2021, when it was valued during a secondary share sale. Such a rise would make it an outlier in Silicon Valley as technology companies have braced for big cuts to their values and investors have pulled back from new deals.
The discussions were first reported by The Wall Street Journal. Founders Fund declined to comment. OpenAI did not respond to a request for comment.
The talks come less than a month after OpenAI released the newest form of its GPT-3.5 software. The chatbot, which can converse with users through text and images, quickly went viral and surpassed 1mn users in five days.
One person with knowledge of the matter cautioned that discussions about an OpenAI tender offer were ongoing and the value of the potential deal had not been finalised.
A wave of tech start-ups have been forced into aggressive cost-cutting measures in recent months amid a stock market rout and funding crunch. In the last three months of 2022, the value of venture capital acquisition deals dropped to $763mn, the first time it has been under $1bn in more than a decade, according to PitchBook.
OpenAI was co-founded in 2015 by big tech figures — including Tesla boss Elon Musk, PayPal co-founder Thiel and investor Sam Altman — to develop “safe” AI. Its earliest backers included Sequoia Capital, Tiger Global Management and Andreessen Horowitz. In 2019, Microsoft invested $1bn in OpenAI as part of an agreement to jointly develop new computing technologies.
Musk stepped down from OpenAI’s board in 2018 to prevent any conflict of interest with his electric car company’s own work on AI. After the ChatGPT software was released, he tweeted: “ChatGPT is scary good. We are not far from dangerously strong AI.”
Venture capital investment in so-called generative AI — artificial intelligence that can produce original content — increased 425 per cent between 2020-22 to $2.1bn, according to data from PitchBook.