OpenAI in talks to raise $6.5 billion at $150 billion valuation

Authors: Rachel Metz, Edward Ludlow, Gillian Tan, Mark Bergen, Bloomberg; Translated by Baishui, Golden Finance

OpenAI is in talks to raise $6.5 billion from investors at a valuation of $150 billion, according to people familiar with the matter.

The new valuation, excluding funds raised, is much higher than the $86 billion valuation the company put in its tender offer earlier this year, cementing its position as one of the world's most valuable startups.

At the same time, OpenAI is also in talks to raise $5 billion in debt from banks in the form of a revolving credit facility, according to a person familiar with the matter who asked not to be named.

The startup declined to comment. People familiar with the matter noted that negotiations are ongoing and terms could change.

The round will be led by Thrive Capital, Bloomberg News previously reported. Thrive declined to comment on the latest valuation. Microsoft Corp., the company’s largest investor, will also participate, and Apple Inc. and Nvidia Corp. have also been in talks to invest.

OpenAI isn’t the first big tech startup to seek revolving credit facilities from Wall Street banks. Many tech companies, including Facebook (now Meta Platforms Inc.), Alibaba Group Holding Ltd., Uber Technologies Inc. and DoorDash Inc., have turned to Wall Street for credit lines before their initial public offerings, often to strengthen banking relationships. Historically, companies have tended to reward banks that make big credit commitments by letting them participate in their IPOs. In return, lenders sometimes offer better financing terms.

Founded in 2015, OpenAI is at the center of the tech industry's rapid shift toward artificial intelligence, sparking an investment frenzy when its easy-to-use chatbot, ChatGPT, debuted in 2022. The company's products, which generate realistic images and human-sounding text with just a few words of prompting, have attracted the attention of consumers and investors.

OpenAI has undergone significant changes as a company since its founding. Late last year, the company briefly ousted CEO Sam Altman. Now, with only a handful of people left from the original founding team, the company has taken steps to restructure its board and add executives.

The financing will support needs for computing power and other operating expenses, OpenAI Chief Financial Officer Sarah Friar said in a memo to employees last month, according to Bloomberg.She also said in the memo that the startup plans to allow employees to sell some of their shares through tender offers later this year.