OpenAI raises $6.6B as it shifts from non-profit to for-profit

OpenAI has closed a multi-billion dollar funding round, the company announced, as the ChatGPT-maker seals its place as the world leader on artificial intelligence (AI).

The company, founded in 2015 and led by Sam Altman, said on Wednesday that the investors pumped in $6.6 billion, propelling OpenAI to a staggering $157 billion valuation.

The landmark injection of cash made OpenAI one of the world's most valuable privately run tech companies, on the same level as SpaceX or TikTok parent ByteDance.

"The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems," OpenAI said in a blog post.

The investment was confirmed by Thrive Capital, the leading investor of the round.

Investors also include Microsoft, chip-making juggernaut Nvidia, Tiger Global and MGX, an investment firm controlled by the United Arab Emirates, reports said.

OpenAI has become one of the most successful startups in Silicon Valley history, propelled to the headlines in 2022 when it released ChatGPT, its generative AI chatbot.

The app was one of the fastest downloaded apps ever, with users getting their first glimpse of the power of generative AI that can churn out human-like content almost instantaneously on simple prompts.

The tech world sees generative AI as the next big chapter in innovation, on par with the PC or smartphone, that will increase productivity exponentially at the workplace and at home.

Non-profit to for-profit

The cash injection comes at a tumultuous time for OpenAI, with a series of departures by key executives in recent months.

Altman's role inside the company has also grown, less than a year after he was briefly fired by the OpenAI board over his management style and for pushing out new products too quickly.

The coup against Altman only lasted a few days after employees rebelled and Microsoft, the company's biggest investor, orchestrated his return.

The executives and board members who played roles in his exit have since left the company.

Reports said the investment round would likely come with a reorganisation of the company that would make it an official "for profit" firm, more typical of Silicon Valley startups.

OpenAI, since its founding in 2015, has been run as a non-profit, with its money-making arm run separately and without control over the company.

Altman is also thought to be getting equity in OpenAI with the new fund-raising round, which would likely make him a multi-billionaire.

Brendan Burke, an analyst for PitchBook, said that wh ile OpenAI's existing close partnership with Microsoft has given it broad access to computing power, it still "needs follow-on funding to expand model training efforts and build proprietary products."

Another question on the table will be the handling of Elon Musk; the tech tycoon was an original investor in OpenAI and has since sued the company for becoming a money-making enterprise.