OpenAI, the artificial intelligence startup behind the popular chatbot, ChatGPT, is reportedly in serious discussions to sell shares at an astounding valuation of $86 billion. This projected valuation is triple its worth from just half a year ago, reflecting the rapid advances in AI technology and the growing market appetite for industry-leading companies.
The San Francisco-based firm, which launched ChatGPT less than a year ago, would become one of the world’s most valuable private entities if the stock sale proceeds at the targeted level. Earlier this year, OpenAI was valued at approximately $29 billion following investments from prominent players like Microsoft and Thrive Capital.
Sam Altman, OpenAI’s CEO and co-founder, wouldn’t directly profit from these valuation leaps since he holds no direct stake in the company. His wealth primarily stems from his investments in several successful Silicon Valley startups, including the payment firm Stripe.
OpenAI has reportedly been discussing a tender offer with existing investors, allowing employees to sell their stock. As much as $1 billion in employee shares could be put up for sale in this offering, though the final figure is expected to be significantly less as many employees choose to retain their stock.
The potential stock sale may or may not be open to new investors, with notable VC funds like Sequoia Capital, Andreessen Horowitz, and Khosla Ventures among the current stakeholders. Joshua Kushner-led Thrive is said to be participating in the tender offer.
This move to offer employee stock to investors is viewed as a strategy to allow staff to share in the company’s success and enhance OpenAI’s competitiveness in attracting top-tier engineering talent.
OpenAI is an industry leader in developing powerful AI-driven chatbots that can interact with users in a convincingly human manner. Following the release of ChatGPT in November last year, it quickly amassed an estimated 100 million monthly active users within two months, marking it as the fastest-growing application ever launched.
The training of chatbots like ChatGPT requires vast computational power and capital, forcing startups at the forefront of this technology to raise significant funds or form partnerships with established tech companies that can provide necessary infrastructure and computing power.
Despite its considerable capital requirements, OpenAI is not actively seeking investments from Middle Eastern sovereign wealth funds, which have recently become increasingly active investors in Silicon Valley.
OpenAI has reportedly surpassed $1 billion in annual revenue and expanded ChatGPT’s capabilities to include video- and speech-recognition. An $86 billion valuation would represent a revenue multiple usually beyond venture capitalist norms. However, given OpenAI’s impressive rate of technological progress and revenue growth, these calculations could rapidly change.