Thrive Capital is investing more than $1 billion of OpenAI’s current $6.5 billion funding round, and it has a sweetener that no other investor gets: the potential to invest another $1 billion next year at the same valuation if the AI company hits a revenue goal, people familiar with the matter said on Friday.
OpenAI expects its revenue to skyrocket to $11.6 billion next year from an estimated $3.7 billion in 2024, the sources said, speaking on condition of anonymity. Losses are expected to be as high as $5 billion this year, depending largely on their spending on computing power, which could change, one of the sources added.
The current round of financing, which comes in the form of convertible debt, is set to close by the end of next week and could value OpenAI at $150 billion, cementing its status as one of the world’s most valuable private companies.
That estimate depends on implementing a complicated restructuring to strip control of its nonprofit board and also remove a cap on returns to investors, a plan first reported by Reuters. There is no specific time frame for when the conversion may be completed.
Thrive Capital, which also led OpenAI’s previous funding round, is offering $1.2 billion from a combination of its own fund and a special purpose vehicle for smaller investors. Other investors in the new round are Microsoft, Apple, Nvidia and Khosla Ventures.
Others were not given the option of future investment at the current price, the sources said. OpenAI’s valuation has risen rapidly, and if it continues to do so, Thrive could increase its stake next year at a discounted price.
Reuters was unable to determine the revenue target associated with the option for Thrive, which was founded by Joshua Kushner.
Thrive and OpenAI declined to comment.
OpenAI’s revenue expectations far exceed CEO Sam Altman’s earlier projection of $1 billion in revenue this year. The main sources of income are sales of its services to corporations and subscriptions to its chatbot.
Its flagship product, ChatGPT, is expected to bring in $2.7 billion in revenue this year, jumping from $700 million in 2023. The chatbot service, which charges a fee of $20 each month, has about 10 million paying users.
The New York Times first reported the financials and details of Thrive’s additional option on Friday.
© Thomson Reuters 2024
(This story was not edited by NDTV staff and was automatically generated from a syndicated feed.)
