OpenAI Secures $40B From SoftBank, Becoming One of the World’s Most Valuable Private Tech Firms: Can They Stay Ahead in the Fiercely Competitive AI Race?

OpenAI Closes Record $40 Billion Funding Round, Valuation Soars to $300 Billion

OpenAI has closed its largest funding round to date, securing a massive $40 billion, bringing the company’s valuation to an impressive $300 billion.

This marks a significant leap from its previous valuation of $157 billion in October 2024.

The latest financing round, led by Japan’s SoftBank, is not only the biggest for OpenAI but also stands as the largest private tech funding round ever recorded.

SoftBank Leads Major Investment Drive

The funding round saw SoftBank contribute $30 billion, with the remaining $10 billion coming from a range of investors, including core backer Microsoft, Coatue, Altimeter, and Thrive Capital.

This extraordinary deal puts OpenAI among the highest valued private companies globally, just behind SpaceX, valued at $350 billion, and on par with TikTok parent ByteDance.

A substantial portion of this new capital, around $18 billion, is earmarked for OpenAI’s Stargate initiative.

Stargate is a joint venture involving OpenAI, SoftBank, and Oracle, first announced by President Donald Trump in January 2025.

SoftBank will initially invest $10 billion, with a further $30 billion expected by the end of 2025.

On 3 February 2025, SoftBank's Masayoshi Son and OpenAI's Sam Altman presented AI business solutions at an event held in Tokyo, Japan.

A Ticking Clock for OpenAI’s Restructuring

However, this funding comes with a significant condition.

If OpenAI fails to restructure into a for-profit entity by the end of the year, SoftBank’s total investment could be slashed to as low as $10 billion.

The restructuring, which would change OpenAI’s unusual hybrid structure to a for-profit model, is not without controversy.

The plan requires approval from Microsoft and the California Attorney General and has already been challenged in court by Elon Musk, one of OpenAI’s original co-founders.

The company’s current model includes a non-profit controlling shareholder and a capped-profit limited partnership, which was created in 2019.

This structure, while designed to balance profit and mission, has made OpenAI’s funding rounds unique compared to other tech companies.

Rapid Growth Fuels Investor Confidence

OpenAI’s meteoric rise, particularly through its ChatGPT platform, has fuelled investor enthusiasm.

The company announced that ChatGPT now boasts 500 million weekly users, up from 400 million just a month ago.

CEO Sam Altman, who recently shifted his focus away from day-to-day operations to concentrate on research and product, noted the rapid user adoption.

He shared on X,

"We added one million users in the last hour."

As the generative AI market continues to grow, OpenAI is poised to triple its revenue to $12.7 billion by the end of 2025.

The company is clearly aiming to capitalise on the surging demand for AI-driven products, with competition from giants like Google and Amazon, as well as startups such as Anthropic and Perplexity.

OpenAI Plans First Open-Weight Language Model Release

As ChatGPT experiences remarkable expansion, OpenAI is set to release its first "open" language model since GPT-2 in the coming months.

The company is seeking input from developers, researchers, and the broader community to shape the model's development, with plans for feedback sessions and prototype demos.

The move comes as OpenAI faces growing competition from rivals like DeepSeek and Meta, who have successfully adopted an open approach to model release.

CEO Sam Altman has acknowledged the need for a shift in OpenAI’s open-source strategy, expressing a desire to adapt its approach despite internal differences.

The Stakes for OpenAI’s IPO Plans

The $40 billion funding comes as part of a broader shift in the tech world, with AI companies increasingly in the spotlight.

CoreWeave recently became the first pure-play AI company to go public, although its debut was less than stellar.

OpenAI’s backers, however, remain optimistic, with investor Mark Klein hinting at the company’s eventual IPO.

During an earnings call, Klein mentioned, “at some point in time,” OpenAI could follow suit, adding that it was part of their investment strategy.

With this latest funding round, SoftBank and other investors are betting on the continued success of OpenAI’s products, particularly ChatGPT, which has become a major player in the AI landscape.

If the company can meet the ambitious targets set by its backers, it may continue to cement its place as one of the world’s most valuable and influential tech firms.