OpenAI completes record-breaking $40 billion financing, valuation soars to $300 billion, becoming the world's third largest unicorn.

OpenAI announced on Monday that it has completed the largest ever private funding round in the technology industry. This $40 billion funding has pushed the developer of ChatGPT to a valuation of $300 billion (including the newly injected funds). According to PitchBook data, this amount is nearly three times the previous highest record for private funding in the technology industry. CB Insights data shows that this valuation has made OpenAI one of the highest valued private companies in the world, second only to SpaceX ($350 billion) and on par with TikTok's parent company ByteDance. SoftBank Group from Japan led this round of funding with $30 billion, with other investors including core investor Microsoft, as well as a consortium of institutions such as Coatue, Altimeter, and Thrive. In a blog post, OpenAI stated that the new funds will be used to "further advance the frontier of artificial intelligence research" and expand computing infrastructure. Sources revealed that around $18 billion of the funds will be used for OpenAI's participation in the "Stargate" project. This joint venture project established by SoftBank, OpenAI, and Oracle was announced by former President Trump in January of this year. The source mentioned that the initial investment is $10 billion, with the remaining $30 billion expected to be in place by the end of 2025. However, this funding round comes with a significant condition: SoftBank stated in disclosure documents updated on Monday that if OpenAI fails to complete its transformation into a profitable entity by December 31, their total investment amount could be reduced to a minimum of $10 billion. This clause puts immense pressure on OpenAI. Their plan to transition into a profitable entity requires approval from Microsoft, the California Attorney General, and also faces legal challenges from the company's co-founder, Elon Musk. OpenAI was originally founded as a non-profit research lab in 2015, with Musk as one of the founding members, who filed a lawsuit on this matter recently. The company currently operates with a rare hybrid structure, including a profit-capped limited partnership entity established in 2019. The original non-profit organization remains the majority shareholder, and if the restructuring is successful, it will split into independent entities. Venture capitalists currently hold convertible bonds that can be converted into equity. PitchBook data shows that the previous largest scale private funding was Ant Group's $14 billion funding in 2018, followed by Juul Labs' $12.8 billion funding in the same year, and Didi Chuxing's $10.8 billion funding the following year. Recent large funding rounds include Databricks' $10 billion funding in December last year, as well as OpenAI's own $10 billion funding in 2023. Investors like SoftBank are betting on ChatGPT to maintain explosive growth. OpenAI announced on Monday that ChatGPT has reached 500 million active users per week, up from 400 million the previous month. The company expects its revenue to double this year, reaching $12.7 billion. CEO Altman wrote on the X platform that, despite ChatGPT's launch being "one of the craziest viral moments I've seen, where we added a million users in five days," the company "added a million users in the last hour." The generative AI market is expected to surpass $1 trillion in the next decade, with companies like Google, Amazon, Anthropic, and Perplexity accelerating the launch of new products, especially in the field of "AI intelligent agents" where competition is heating up. Just last week, OpenAI completed a high-level executive restructuring, with CEO Altman reducing his involvement in day-to-day operations to focus more on research and product development. COO Lakecap will expand his duties to oversee "business and daily operations." This funding round coincides with CoreWeave becoming the first pure AI company to go public, but it had a rocky start. Their stock debuted with zero gains on Friday and dropped over 7% on Monday. OpenAI investor and CEO of SuRo Capital, Mark Klein, revealed in a financial earnings call this month that at some point in the future, their investment portfolio will include OpenAI's IPO.