OpenAI, the AI startup that created the widely-used conversational AI model ChatGPT, has received a new investment from venture capital firms including Tiger Global, Sequoia Capital, Andreessen Horowitz, Thrive, and K2 Global. Founders Fund is also said to be investing. According to documents seen by TechCrunch, the VC firms have invested just over $300 million at a valuation of between $27 billion and $29 billion. This is separate from a $10 billion investment from Microsoft, which was announced earlier this year.
The investment is said to be the closing of a tender offer that was reported in January. The term sheets have been signed by the investors, and the money has been transferred. However, the investment has yet to be countersigned by OpenAI, and the plan was to make the investment public next week.
With this investment, outside investors now own more than 30% of OpenAI. PitchBook data shows that Peter Thiel was already a backer, but Founders Fund, K2 Global, and Thrive are all first-time backers of the startup. Sequoia, Andreessen Horowitz, and Tiger Global had previously invested in the company.
OpenAI has been the focus of much attention in recent times, particularly its GPT (Generative Pre-trained Transformer) family of large language models used by third parties through APIs. ChatGPT, the generative AI service released by OpenAI at the end of November 2022, based on GPT, has been a massive hit, with over one billion visitors to its website in February, according to SimilarWeb.
While generative AI is the talk of the town, OpenAI has also attracted controversy over ChatGPT. Many have questioned whether the product lies, whether it is a "virus," how it handles privacy, if it can be manipulated to be toxic, or commit libel. Additionally, the openness of OpenAI's GPT branding has come under scrutiny.
Despite the controversies, hundreds of businesses have started deploying GPT and ChatGPT into their products and services. This has also spurred on other big tech companies to speed up their own efforts in generative AI. Google has launched Bard, and Meta has introduced LLaMA to take on GPT with its proprietary LLM.
OpenAI's singular focus on the AI space since its founding in 2015 has given it undeniable gravity amid competition. That's even as it has gone through some significant changes, including shifting from its original non-profit model. OpenAI's co-founder and CEO, Sam Altman, said at an AI conference earlier this year that "We’ve been working on it for so long, but it’s with gradually increasing confidence that it’s really going to work."
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