OpenAI has reportedly lowered the target for its latest OpenAI funding round to about $20 billion, down from an earlier goal of $30 billion. The Financial Times first reported the change, and TechCrunch said on October 31 that the first close is expected to be even lower.
The Numbers
- New target: about $20 billion, per the Financial Times.
- Earlier target: $30 billion at a $1.4 trillion valuation, later reported at $1.25 trillion.
- Raised so far: about $11 billion, according to The Wall Street Journal, which described some large investors’ response as “tepid.”
OpenAI has not confirmed the figures.
Who’s Investing
The round is expected to be led by a group of investors from the United Arab Emirates. A later offering for wealthy individual investors could help close the gap to the $20 billion target. The UAE connection is growing: on November 2, Abu Dhabi and OpenAI signed four new AI agreements.
Why the Target Dropped
The main reason cited is timing. Wall Street investors have grown wary of the huge sums AI companies are spending on data centers and chips, which has fed a sell-off in tech stocks. Just a month ago, OpenAI was reportedly in talks to raise $30 billion or more after its annualized revenue passed $40 billion.
What It Means for the AI Industry
The pullback suggests investors are starting to look harder at AI infrastructure costs. It may also affect Anthropic, which filed its S-1 for a Nasdaq IPO. Reports say Anthropic’s IPO could face its own challenges in the current market.
For businesses and marketers, cooling investor appetite could mean more pressure on AI companies to grow revenue, through higher prices, tighter limits or more advertising. We’re already seeing signs of that, from a shared ChatGPT and Codex usage limit to ChatGPT Ads expanding to 89 countries. It also follows a price war on cheaper models.
Key Takeaways
- OpenAI’s funding target reportedly fell from $30 billion to about $20 billion.
- The valuation was reported at $1.25 trillion, down from $1.4 trillion.
- About $11 billion has been raised so far, led by UAE investors.
- Investor concern about AI infrastructure spending is the main reason cited.
Sources: TechCrunch, citing the Financial Times and The Wall Street Journal; CoinDesk.
