OpenAI secures $6.6 billion in funding from Microsoft, Nvidia, and other investors.

OpenAI, the organization behind ChatGPT, has successfully raised $6.6 billion in fresh funding, attracting major investors such as Microsoft, Nvidia, Thrive Capital, and Khosla Ventures, according to a recent report from Reuters. This funding round also includes contributions from prominent backers like Altimeter Capital, SoftBank, and MGX, the state-backed investment firm from Abu Dhabi. This influx of capital could potentially elevate the company's valuation to $157 billion, making it one of the most valuable private firms globally. Notably, despite earlier rumors, Apple did not participate in this funding round. 

The funding is structured as convertible notes, which means the investment will convert into equity if certain conditions are met, including a restructuring that may transition OpenAI from its current nonprofit-controlled model to a fully for-profit entity.

Microsoft, OpenAI's largest corporate supporter, plays a key role in this funding round, while new participants like Nvidia, a leader in AI hardware, have also joined. Thrive Capital, a returning investor, committed $1.2 billion with the option to invest an additional $1 billion next year if OpenAI meets specific revenue targets. 

The completion of this substantial funding coincides with significant internal changes at OpenAI, including the unexpected departure of longtime Chief Technology Officer Mira Murati. Nevertheless, investor enthusiasm remains robust, with many optimistic about the company's continued growth. OpenAI CEO Sam Altman anticipates a considerable increase in revenue, projecting that the company could generate $11.6 billion next year, a significant jump from the $3.6 billion expected in 2024.

However, despite rising revenues, OpenAI is grappling with significant losses, exceeding $5 billion this year. To support its employees, OpenAI intends to provide liquidity through a tender offer, allowing staff to sell some of their shares. This follows a similar initiative earlier this year, where employees were permitted to cash out shares based on a company valuation of $86 billion.

The company acknowledges that the restructuring process is ongoing and may take time to finalize. According to the Reuters report, investors have negotiated terms that enable them to reclaim their capital or renegotiate the valuation if these changes are not implemented within two years.