OpenAI cuts its funding round target by $10B to about $20B as the AI sell-off bites
What's the deal? OpenAI has cut the target for its latest funding round by $10 billion, the Financial Times reported late on 30 October. The ChatGPT maker is now seeking about $20 billion at a $1.25 trillion valuation, down from the $30 billion at $1.4 trillion it had aimed for last month. OpenAI set a Friday deadline for investors to commit, but the first close is expected to come in below $20 billion after some investors reduced their allocations.
Who's in? A UAE consortium including state-backed technology fund MGXDealroom has a profile for this one. Try Dealroom → is expected to be the largest participant, and as part of the deal OpenAI would get the option to lease newly built computing capacity in the region. Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part, and wealthy individuals would be offered a later retail tranche at the same $1.25 trillion valuation, according to the FT.
Why now? The cut lands in the middle of a sharp AI-led sell-off: the Nasdaq fell 2.9% on Friday and is down 7.8% from its 6 October record close, per Reuters. OpenAI had been racing to lock in commitments before rival Anthropic, which has filed for a Nasdaq IPO and is expected to list in mid-November, starts competing for the same pool of investors.
The signal: In March OpenAI closed a record $122 billion round at an $852 billion post-money valuation. A smaller book only seven months later is the clearest sign yet that the appetite for funding frontier AI labs at ever-higher prices has limits, at least while public tech stocks are falling. OpenAI did not comment on the report.
Read more: Financial Times, Reuters, Bloomberg
Image credit: OpenAI
