OpenAI has finalised what is being described as the largest private funding round in technology history, raising $40 billion at a post-money valuation of $300 billion.
The deal nearly doubles the company’s previous valuation of $157 billion, set just six months ago.
Japan’s SoftBank is leading the round. Other participants include Microsoft, Coatue, Altimeter, and Thrive, all of which are earlier backers of the company.
According to data from research firm PitchBook, the raise is nearly three times the largest amount previously raised by a private technology company.
The valuation places OpenAI alongside SpaceX at $350 billion and TikTok parent ByteDance among the world’s most richly valued private companies.
Where the money is going
OpenAI says the capital will fund AI research, compute infrastructure, and product development.
Around $18 billion of the funding is expected to go toward the company’s Stargate infrastructure project, which aims to build a network of AI data centres across the United States.
Stargate is a joint venture between SoftBank, OpenAI, and Oracle, projected to cost $500 billion in total.
It would give OpenAI greater control over the hardware environment in which its models operate.
A condition attached
The deal comes with a significant caveat. SoftBank said in an updated disclosure that its total investment could be slashed to as low as $20 billion if OpenAI does not restructure into a for-profit entity by December 31.
The restructuring would require approval from both Microsoft and the California attorney general.
The plan has already encountered legal challenges from Elon Musk, who helped establish OpenAI as a nonprofit research laboratory in 2015.
Growth driving investor confidence
OpenAI reported that ChatGPT now has 500 million weekly users, up from 400 million the previous month. The company also expects revenue to triple to $12.7 billion by the end of this year.
CEO Sam Altman noted the pace of adoption in a post on X. While the ChatGPT launch once added one million users in five days, the company is now adding that many in a single hour.
Questions about profitability remain
Despite the headline numbers, analysts have flagged concerns about the underlying economics.
“We have not seen the ROI associated with what OpenAI is delivering,” said Futurum Group analyst David Nicholson.
“There is nothing rational about this investment, other than doubling down on the bet that this will be very valuable someday.”
Compute costs, energy demands, and rapid changes in hardware technology make it difficult to map out a clear path to profitability.
The real question, analysts say, is whether OpenAI can demonstrate what its economic model for profitability actually looks like and how much users are willing to pay.
IPO outlook
No formal timeline for a public listing has been confirmed. However, an investor in OpenAI told shareholders earlier this month that an IPO was anticipated “at some point in time.”
The funding round is widely seen as a step toward preparing the company for a potential public debut.
The raise places OpenAI in a rare company. Only a handful of private firms in history have reached or surpassed the $300 billion mark.
Whether the valuation holds will depend on OpenAI’s ability to convert its user growth into durable, profitable revenue, a question investors are betting heavily it can answer.
