OpenAI has received about $11 billion in the first closing of a funding round that values the company at $1.25 trillion. The round remains open and could total $20 billion, with the remaining funding expected to close in the coming weeks. The deal comes as investors reassess the scale of capital required to build AI infrastructure and the sector’s growth prospects.
First $11 billion arrives
The initial funds were transferred to OpenAI on November 6, people familiar with the matter said. Coatue Management and T. Rowe Price were among the first investors in the round, which is being conducted at a $1.25 trillion valuation. Further commitments could bring the total to $20 billion, with completion expected over the next few weeks.
Other investors include SoftBank Group, Sequoia Capital, Founders Fund and Andreessen Horowitz. A group of investors from the United Arab Emirates also took part. OpenAI is working with investment banks to raise money from high-net-worth individuals and retail investors.
OpenAI declined to comment. SoftBank, Founders Fund and T. Rowe Price did not respond to requests for comment. Coatue, Andreessen Horowitz and Sequoia Capital did not immediately respond.
Fundraising target cut from more than $30 billion
OpenAI had previously sought at least $30 billion at a $1.4 trillion valuation. After more than a month of fundraising discussions, the company scaled back its target as public-market sell-offs in AI stocks prompted investors to reconsider the sector’s outlook.
The company has also postponed plans for an initial public offering. The current round gives OpenAI capital to continue investing in its business while allowing investors to gain exposure before the company is publicly listed. The revised fundraising target and valuation reflect a reassessment of the funding needs and pricing of large AI companies.
Infrastructure costs weigh on sentiment
Investors have become more focused on the substantial spending required for physical infrastructure, including data centers. The prospect of new obstacles to data-center construction after the U.S. midterm elections has added uncertainty to related investment plans.
OpenAI has been one of the companies at the center of the AI boom, but the smaller fundraising target points to a funding environment that is less unconditionally expansionary than before. Whether the round reaches $20 billion depends on completing the remaining fundraising; about $11 billion has been received so far.