OpenAI seeks $30B at $1.4T valuation ahead of IPO
What's the story
OpenAI is reportedly in talks to raise at least $30 billion in a pre-IPO funding round. The company is looking for a valuation of around $1.4 trillion, Bloomberg reported on Tuesday. The move comes as investors are keen to invest more into the ChatGPT maker ahead of its expected public market debut next year.
Financial performance
OpenAI's revenue hit $40B in August
Despite a brief period of being outpaced by Anthropic at the start of the year, OpenAI has seen a 70% jump in run-rate revenue since July.
The company's revenue hit $40 billion in August. This growth comes after a strategic refocus on key areas like coding.
In March, OpenAI had raised $122 billion at an $852 billion valuation, which was supposed to be its last private raise before going public.
Public offering
Altman pushes back IPO
However, CEO Sam Altman has now ruled out a public debut in 2026 to prioritize AI safety first.
"I think it is unacceptable to be taking like a 10% chance of killing everybody by the end of the decade," he recently told Fortune.
The new fundraising round, if it happens, will serve as a bridge round to the IPO.
Market competition
OpenAI, Anthropic competing for business customers ahead of IPOs
OpenAI is in a fierce competition with Anthropic to sign more business customers and boost revenue ahead of their planned Wall Street debuts.
Both companies have confidentially filed for an IPO, with Anthropic likely to go public as early as this fall.
However, Altman recently said his firm would not go public this year due to heightened artificial intelligence safety concerns.
Safety precautions
AI safety concerns prompt fundraise, delay in IPO
The latest fundraise is aimed at providing OpenAI with additional capital instead of an IPO.
The company has been under scrutiny over the potential for AI to cause catastrophic harm, including cybersecurity breaches.
In fact, OpenAI's technology has been linked to several security incidents, such as targeting Australian government websites.
The company recently decided not to release its latest model, GPT-6.1 Astra, after it failed internal safety standards.