OpenAI isn’t going anywhere: raises $6.6B at $157B valuation
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Despite a wave of executive departures in recent months, OpenAI has today announced an expected new funding round.
It was always expected to be a whopper, but the amount it raised — $6.6 billion at a $157 billion total company valuation — now makes it the largest venture capital round in history to date, according to Axios.
The round was led by Thrive Capital, according to Bloomberg, while CNBC notes that heavy hitters including Nvidia and Microsoft plowed more cash into this round as well.
In announcing the funding on its website, OpenAI noted that ChatGPT alone counts more than 250 million weekly unique users.
“The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems,” the company wrote in a short blog post.
Reasons for skepticism?
However, the news was still greeted with skepticism among AI critics including the outspoken tech public relations expert and tech writer Ed Zitron, who’s latest newsletter is headlined “OpenAI is a bad business” and argues that OpenAI’s decision to take a reported $500 million from the infamous Softbank Venture Fund — which has notably invested in duds like WeWork — combined with its reliance on individual ChatGPT subscriptions rather than API usage or licensing, suggests it is not well positioned to succeed as a for-profit in the future.
These are, in my opinion, fair criticisms, as is noting the fact that Apple reportedly declined to invest in the firm after giving it consideration and potentially in the wake of former chief technology officer Mira Murati’s resignation just last week.
And then there came the report from The Financial Times that OpenAI made part of the conditions of those who were throwing money its way that they not invest in rivals including Anthropic, which was founded by former OpenAI researchers and continues to pick up more exiting execs, and Musk’s xAI — recently reported to have switched on its Memphis training supercluster “Colossus” with 100,000+ Nvidia H100 GPUs — seemingly showing that OpenAI is worried about the competition catching up.
Musk, for his part, took the news of OpenAI’s reported conditions on exclusive funding with his typical blunt criticism, calling the company evil on his X account.
And indeed, the competition in the AI space is intensifying with more, newer models emerging such as Liquid AI’s new non-transformer based Liquid Foundation Models (LFMs), and Google and Anthropic also fielding compelling enterprise and consumer-facing options. Meanwhile, Meta and Alibaba are releasing powerful open source models for free.
The OpenAI bull case
Still, OpenAI’s models top the charts when it comes to the third-party performance benchmarks, and every time they have been overtaken, OpenAI has released an update or entire new class of models such as the o1 preview series that retakes the throne.
So for now, fueled by $6.6 billion in fresh funding and with new models, developer tools, and aggressive cost cutting measures for developer customers (intelligence that is “too cheap to meter” in the words of many in the AI industry) — it appears that OpenAI is not going anywhere anytime soon. It may, in fact, be too big to fail, as I speculated it was becoming a few weeks ago.
For developers building products atop the company’s AI models and frameworks, this is probably welcome news — as they are likely to stable and supported going forward.
Will OpenAI give GPT creators any more $$$?
However, one big question remains regarding OpenAI’s custom GPT Store, its version of a kind of AI app store which launched in January 2024 and allows any ChatGPT Plus user to create and share custom versions of ChatGPT designed to fulfill specific roles and perform specific tasks.
OpenAI CEO and co-founder Sam Altman said at its developer conference DevDay in late 2023 that revenue sharing would be coming, and some users reported that they did receive some revenue from their GPTs, but we haven’t heard much from OpenAI about it since.
Now flush with cash, I’m wondering if OpenAI will start paying out more to more GPT creators (selfishly as well, since I’ve created a few custom GPTs — full disclosure). I’ve reached out to the company to ask about that an will update when I hear back.
Either way, OpenAI’s coffers have been refilled, and despite the chaos behind the scenes, the company continues to ship new AI products regularly — though we’re all still waiting on the public release of its AI video model Sora.
