April 21, 2024

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OpenAI completes deal valuing company at $80 billion

OpenAI completes deal valuing company at $80 billion

OpenAI has completed a deal that values ​​the San Francisco artificial intelligence company at $80 billion or more, nearly tripling its value in less than 10 months, according to three people with knowledge of the deal.

The company will sell existing shares in a so-called tender offer led by venture firm Thrive Capital, the people said. The deal allows employees to cash out their shares in the company, rather than a traditional financing round that would raise money for business operations.

OpenAI, which declined to comment, is now one of the most valuable tech startups in the world, behind ByteDance and SpaceX. According to figures from data tracker CB Insights.

The deal is another example of Silicon Valley's deal-making machine funneling money into a handful of companies that specialize in generative AI — technology that can generate text, sounds, and images on its own. The funding boom began early last year, after OpenAI captured the public's imagination by launching its online chatbot ChatGPT.

(The New York Times sued OpenAI and its partner, Microsoft, in December, alleging copyright infringement on news content related to AI systems.)

The deal comes at a critical time for OpenAI, providing it with an important vote of confidence after a year of controversy. In November, the company's board of directors fired Sam Altman, its CEO, because he had lost confidence in his leadership. The dismissal sparked a week of chaos and threw the company's future into doubt, with employees threatening to quit in solidarity with Mr. Altman. He was eventually reinstated and several board members resigned.

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In an effort to resolve last year's turmoil, OpenAI hired the law firm WilmerHale to review the board's actions and Mr. Altman's leadership. WilmerHale is expected to finish its report on the episode early this year.

The company agreed to a similar deal early last year. Venture capital firms Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global have agreed to buy shares of OpenAI in a tender offer, valuing the company at about $29 billion.

Thrive declined to comment.

Investors are eager to pour money into AI companies. Last January, Microsoft invested $10 billion in OpenAI, bringing its total investment in the San Francisco startup to $13 billion.

Since then, OpenAI competitor Anthropic has raised $6 billion from Google and Amazon. Cohere, a startup founded by former Google researchers, has raised $270 million, bringing its total funding to more than $440 million, and Inflection AI, founded by a former Google executive, has raised a $1.3 billion round, bringing its total funding to $1.5 billion. .

OpenAI appeared to be on the verge of closing its latest deal in November, when Mr. Altman was unexpectedly fired. In the week that followed, the potential deal clouded Mr. Altman's efforts to negotiate his return to the company. Before his reinstatement, more than 700 of the company's 770 employees signed a petition demanding his reinstatement.