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OpenAI receives $11 billion in funding, Bloomberg reports

Credited to Rackline · Rachel Okonkwo · theedgemalaysia.com · 14h ago

Sarah Friar at MoneyConf in Dublin on June 12, 2018, when she was Square's chief financial officer.

OpenAI has received roughly $11 billion in the first close of a new financing round that values the company at $1.25 trillion, Bloomberg reported, citing people familiar with the transaction. The money had been wired to the company by Friday, Nov. 6, according to the report.

The round could grow to as much as $20 billion in the coming weeks, Bloomberg reported. That prospective total includes the first close. OpenAI's earlier financing included commitments funded in stages over several months, so the amount announced and the cash received can differ for some time.

OpenAI’s new funding round

The possible total includes the reported first close; it is not additional money already received.

OpenAI's reported roughly $11 billion first close is part of a possible total of up to $20 billion, not additional to it.
Measure	Reported amount and status
Reported first close — Nov. 6	Roughly $11 billion. Bloomberg reports cash wired by Nov. 6; Reuters separately reports the close.
Possible final round total	Up to $20 billion. Bloomberg: prospective total including the first close, not a completed total or committed remainder.

Source: Bloomberg via The Edge (Nov. 7); Reuters via StreetInsider (Nov. 6).Reported figures. The possible total includes the first close; the remaining amount is not established as committed.

Coatue Management and T. Rowe Price put money into the first close, according to Bloomberg. It reported that SoftBank, Sequoia Capital, Founders Fund, Andreessen Horowitz and a group of investors from the United Arab Emirates were also taking part in the wider round. Reuters, citing two investors, named SoftBank and the Abu Dhabi investment company MGX. Neither report gave individual check sizes.

OpenAI first sought $30 billion or more at a $1.4 trillion valuation, then scaled back its plans during a selloff in listed AI stocks, Bloomberg reported. Reuters put the initial valuation goal at $1.5 trillion. Neither report includes an offering document establishing the original terms.

Chief Financial Officer Sarah Friar disputed the suggestion that OpenAI was raising less at a lower valuation when asked in a CNBC interview on Friday. She said the round was still open and that she was confident in it. She did not say how much had been funded.

The new money follows a much larger round. On March 31, OpenAI said it had closed $122 billion in committed capital at an $852 billion post-money valuation. Amazon, Nvidia and SoftBank anchored that round, Microsoft continued to invest, and institutional investors included Coatue, Sequoia and accounts advised by T. Rowe Price Associates.

Some of that capital was funded in installments. SoftBank said on Oct. 1 that it had paid a final $10 billion installment, completing the $30 billion follow-on investment it announced in February. That disclosure covers the March round and says nothing about SoftBank's reported role in the new one.

Amazon's February securities filing also split its commitment in two. It set out a $15 billion initial investment and a further $35 billion that depends on conditions, including specified milestones or a public listing.

OpenAI has sold shares to individuals before. In March the company said bank distribution channels had raised more than $3 billion from individual investors in that round. Bloomberg reported that OpenAI is again working with investment banks to raise money from wealthy individuals and retail investors, without naming the banks or the amounts.

The reports do not disclose allocations between institutions and individuals, so they do not establish whether that mix has changed from March.

OpenAI has tied its fundraising to buying computing capacity. In February it linked its financing to a strategic partnership with Amazon and to additional Nvidia infrastructure, including three gigawatts of inference capacity and two gigawatts for training. Those arrangements predate the new round, and none of the reports ties specific spending to the November money.

The reports describe new money going to OpenAI rather than sales by existing shareholders. None discloses a share purchase agreement, share count, investor protections or any secondary sale. Without those terms, the headline valuation does not show how much of the company the new investors own or what rights they hold.

Sarah Friar at MoneyConf in Dublin on June 12, 2018, when she was Square's chief financial officer. Photo: Stephen McCarthy/MoneyConf via Sportsfile, “SM1_1478”, CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/). Source: https://www.flickr.com/photo.gne?id=27881146027 . Uncropped; no alterations. ©SPORTSFILE.