OpenAI has raised more than $3bn from retail investors as part of a huge funding round that the company hopes will help it outmuscle rivals, including Anthropic, and set it on the path to an initial public offering as early as this year.
The ChatGPT maker has closed a record funding round of up to $122bn which dwarfs any previous private raise and values the company at $852bn, including the new money.
As part of that deal, OpenAI has tapped retail investors for the first time, through a trio of banks and exchange traded funds managed by Cathie Wood’s ARK Invest.
The company framed their participation as a way of “giving more people the opportunity to share in the upside economics of OpenAI and the AI era”. The deals were the largest private placements the banks had completed, said Sarah Friar, OpenAI’s chief financial officer.
Retail investors are expected to play an important role in the big public listings anticipated over the next 12 months, accounting for as much as 30 per cent of the SpaceX float and participating in IPOs for OpenAI and Anthropic, said people familiar with the matter.
Friar said broadening access was consistent with the company’s mission of ensuring powerful AI was created “for the benefit of humanity.” That meant “not just access to the technology but access to the financial upside”, she said on Tuesday.
Currently, only wealthy retail investors could access the stock, but Friar said one of her main priorities was to expand that in time.
Growing retail exposure to lossmaking private companies is also likely to be a concern. Individual investors tend to be less sophisticated than financial groups such as venture capitalists and are often afforded fewer protections than earlier backers. They tend to gain access later and at higher valuations too.
Retail investors became a mainstay of private capital over the past decade but have begun pulling money from some funds this year amid a downturn in that market.
OpenAI’s partners SoftBank, Amazon and Nvidia committed $110bn of the total raised; Microsoft and venture capital firms including Andreessen Horowitz, Sequoia Capital and Thrive Capital accounted for billions of dollars more.
Amazon’s $50bn commitment is split between a $15bn upfront investment and a $35bn tranche, which will follow when OpenAI either goes public or achieves so-called artificial general intelligence, a breakthrough that Friar defined as “the majority of economically valuable human work being able to be done by [AI] agents”.
OpenAI is raising the new capital to fuel its competition with Anthropic, Google and others building frontier AI models. The company is fighting to build upon and monetise its 900mn or so individual users while also making inroads on selling to businesses.
The San Francisco-based group has jettisoned a number of projects in recent weeks, including its video app Sora and a planned erotic chatbot, as it seeks to focus only on its core business.
OpenAI said it was generating $2bn a month in revenue, roughly 60 per cent from its consumer business and the remainder from enterprises.
