OpenAI Seeks Up to $30 Billion at $1.25 Trillion Pre-Money Valuation, UAE and Coatue Co-Lead
OpenAI, the company that makes ChatGPT, is close to raising up to $30 billion in a new funding round. The deal would value the company at $1.25 trillion before the new money is added. Investors from the United Arab Emirates (UAE) and investment firm Coatue are leading the deal, according to people familiar with the talks.
On Thursday, the San Francisco company told potential investors that it wants them to sign agreements to invest by the end of next week, the people said. The final amount of money it will raise is still being discussed. The $1.25 trillion figure is called a pre-money valuation because it does not include the new money being raised.
OpenAI describes the fundraising as an "opportunistic" way to raise money before a possible initial public offering (IPO), when a company first sells shares to the public. Chief Financial Officer Sarah Friar has told staff that OpenAI would likely go public in 2027. CNBC, which first reported the deal's terms, said OpenAI has filed confidential paperwork to prepare for a public listing.
Along with selling shares, OpenAI is discussing a business deal that would secure more computing capacity from the UAE, one person said. This would give the company more computing resources in addition to the money it raises. OpenAI needs large amounts of computing power to expand its AI operations, which require heavy spending on computer chips and data centers.
The proposed terms appear to have changed during the week. Reuters earlier reported that OpenAI was seeking a valuation above $1.4 trillion. The $1.25 trillion figure now being discussed is lower. This shows that the final deal is still being worked out as the company seeks promises from investors to provide money.
The new funding round would follow a $122 billion financing round in March, which valued OpenAI at $852 billion after the new money was included. The proposed valuation would be a big increase from that earlier figure, although the new deal has not been finalized.
A Race to the Public Markets
Timing matters. Rival AI company Anthropic is preparing for an expected IPO in November and is seeking a valuation of up to $2 trillion. However, some investors think a figure closer to $1.5 trillion may be more suitable because they have concerns about the company's future growth, Reuters reported. OpenAI is trying to secure investment promises before Anthropic reveals details of its planned public listing. This would let investors compare the two companies directly. The timing also reflects competition for a limited amount of money from government investment funds and large institutional investors.
Both companies are seeking valuations of trillions of dollars. The value investors eventually give them will depend on how quickly their revenue grows, how well they compete with other companies, and how much it costs to build the computer systems needed to run AI.
Market conditions are making it harder for companies to raise money. Rising interest rates, changing technology stock prices, and closer attention to spending on AI infrastructure have complicated fundraising and plans to go public across the industry. Investors have also become nervous about CoreWeave and have questions about how easily companies will be able to get financing in the future.
On Thursday, major U.S. technology stocks fell broadly. The Wind U.S. Magnificent Seven index dropped 2.80%. Meta shares fell nearly 7%, Amazon and Nvidia each fell more than 4%, and Tesla and Alphabet each fell more than 3%.
| Item | Detail |
|---|---|
| Round size | Up to $30 billion |
| Valuation | $1.25 trillion, pre-money |
| Lead investors | UAE investors and Coatue |
| Target signing | End of next week |
| Prior round | $122 billion in March at $852 billion post-money |
| Expected IPO window | 2027, per CFO Sarah Friar |
Note: Valuation figures are based on the company's value before new money is added, unless stated otherwise. The previous funding round's figure is based on the company's value after the new money was included.
For investors, this funding round offers a chance to own part of a leading AI company before it enters the public stock market. It would also give OpenAI extra money to support its move toward a possible public listing. The deal would set a reference point for OpenAI's value before Anthropic's IPO tests investors' interest in the AI industry. It is still unclear whether investors will accept valuations close to $2 trillion for the biggest AI companies. Their decisions will depend on how they compare the chance of future growth with the rising costs of building the computer systems and data centers needed for AI.