OpenAI has completed a deal that values the San Francisco artificial intelligence company at $80 billion or more, nearly tripling its valuation in less than 10 months, according to three people familiar with the deal.
The company will sell existing shares in a so-called auction led by venture capital firm Thrive Capital, the people said. The deal allows employees to redeem their shares in the company, instead of a traditional financing round that would raise money for business operations.
OpenAI, which declined to comment, is now one of the most valuable startups in the world, behind ByteDance and SpaceX, according to data from data tracker CB Insights.
The deal is another example of Silicon Valley’s deal-making machine pumping money into a handful of companies specializing in genetic artificial intelligence — technology that can generate text, sounds and images on its own. The funding boom began early last year after OpenAI captured the public imagination with the release of the online chatbot ChatGPT.
(The New York Times sued OpenAI and its partner Microsoft in December, alleging copyright infringement in news content related to AI systems.)
The deal comes at a critical time for OpenAI, giving it a major vote of confidence after a year of controversy. In November, the company’s board fired Sam Altman, its chief executive, after losing confidence in his leadership. The firing sparked a week of chaos and threw the company’s future into doubt as workers threatened to quit in solidarity with Mr Altman. Eventually, he was reinstated and several board members resigned.
In an effort to resolve last year’s turmoil, OpenAI has hired law firm WilmerHale to review the board’s actions and Mr. Altman’s leadership. WilmerHale is expected to complete 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 an auction, valuing the company at around $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 start-up to $13 billion.
Since then, OpenAI competitor Anthropic has raised $6 billion from Google and Amazon. Cohere, a start-up founded by former Google researchers, raised $270 million, bringing its total funding to more than $440 million, and Inflection AI, founded by a former Google executive, also raised a round 1 .3 billion dollars, bringing its total to $1.5 billion.
OpenAI appeared to be close to finalizing its latest deal in November when Mr. Altman was unexpectedly fired. In the week that followed, the potential deal came up in Mr. Altman’s efforts to negotiate his return to the company. Before he was reinstated, more than 700 of the company’s 770 employees signed a petition for his reinstatement.
