OpenAI has cut the target for its latest funding round by $10 billion and is now seeking $20 billion at a $1.25 trillion valuation, according to the Financial Times. The company had previously planned to raise $30 billion at a $1.4 trillion valuation.
OpenAI set Friday, October 30 as the deadline for investors to commit. The first close is now expected to raise less than the revised $20 billion, because some investors reduced their allocations, according to people familiar with the fundraising process.
The revision trims $150 billion from the valuation OpenAI had been floating and takes a third off the cash it was trying to raise. Final terms are still being worked out, including how much of the round lands in the first close.
Key facts
- 01OpenAI cut its funding round target by $10 billion to $20 billion, according to the Financial Times.
- 02The round now values OpenAI at $1.25 trillion, down from the $1.4 trillion it had planned around a $30 billion raise.
- 03Investors faced a Friday, October 30 deadline to commit, and the first close is expected to come in under $20 billion.
- 04The Nasdaq fell 2.9% on October 30 and closed 7.8% below its October 6 record.
- 05OpenAI had been pushing to close the round before Anthropic's expected public market debut in mid-November.
Timing was part of the plan. OpenAI had been racing to lock in commitments before Anthropic makes its expected public market debut in mid-November. The two labs draw on a similar pool of investors, which gave OpenAI a reason to close before the Anthropic listing competes for the same capital.
Anthropic filed paperwork for its initial public offering this week under the ticker symbol ANT. Its own financing picture is also under scrutiny: the Financial Times reported that Blackstone told investors Anthropic may not qualify for an investment-grade credit rating after the IPO.
The cut comes at the end of a rough week for AI-linked stocks. The Nasdaq Composite fell 2.9% on Friday and finished 7.8% below its record close of October 6. Alphabet lost about $500 billion in market value on Thursday after reporting $51.4 billion in quarterly capital expenditures, and Nvidia fell 4% on Friday.
The reduced target follows growing investor concern over AI spending. Alphabet, Amazon, Meta and Microsoft have outlined more than $740 billion in combined capital expenditures this year, and their shares fell through the week as each reported results.
OpenAI did not immediately respond to a request for comment made outside regular business hours. The company has not said publicly how much it expects to raise in the first close or who is anchoring the revised round.
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