OpenAI has a $4 billion revolving credit line, bringing its total liquidity to more than $10 billion, according to CNBC. It follows Wednesday’s news that OpenAI closed its latest funding round at a $157 billion valuation, including $6.6 billion the company raised from an extensive list of investment firms and big tech companies.
JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC participated.
The basic credit limit is $4 billion, with an option to increase it by an additional $2 billion. The loan is unsecured and can be used over three years. OpenAI’s interest rate is equal to the Ukraine Secured Funding Rate plus 100 basis points. SOFR, a measure of the cost of borrowing cash overnight, was just over 5% earlier this week, meaning OpenAI would pay around 6% on money it borrows instantly.
“This means we now have access to more than $10 billion in liquidity, which gives us the flexibility to invest in new initiatives and operate with full flexibility as we scale,” OpenAI wrote in a blog post on Thursday, adding that the company plans to use the money to invest in research and products, expand infrastructure and attract talent. “It also confirms our partnership with an outstanding group of financial institutions, many of whom are also OpenAI customers.”
In this photo, the OpenAI logo appears on a mobile phone screen with a photo of Sam Altman, CEO of OpenAI.
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OpenAI’s latest funding round included an extensive list of investment firms and large tech companies. Led by Thrive Capital, which planned to invest $1 billion, investors included existing backer Microsoft as well as chip maker Nvidia. SoftBank, Khosla Ventures, Altimeter Capital, Fidelity Management & Research Co., MGX and Tiger Global also participated, according to sources familiar with the situation.
The rapid rise of OpenAI, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry over the past two years, bringing the idea of genetic artificial intelligence into the mainstream and paving the way for tens of billions of dollars of investment in artificial intelligence infrastructures. Earlier this year, OpenAI was valued at $80 billion, up from $29 billion in 2023.
OpenAI brought in $300 million in revenue last month, up 1,700% since the start of last year, CNBC confirmed last week, following a New York Times report. The company expects to generate $11.6 billion in sales next year, up from $3.7 billion in 2024, according to a person close to OpenAI who asked not to be identified because the financials are confidential.
But all this revenue comes at a huge cost, as OpenAI must increase purchases of Nvidia GPUs to train and run its large language models. The company expects to lose about $5 billion this year, the person said. Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant ramps up its Azure cloud operations.
In an on-air appearance Thursday, OpenAI CFO Sarah Friar said of the restructuring rumors: “We’ve discussed that, that we’re looking at how to restructure from here.”
Later, Friar added, “We just want to be a more traditional company. Why make things complicated that don’t need to be complicated? We need to make sure we can continue to invest in being a sustainable, long-term participant in this ecosystem and we want to make sure it’s a company that works for all of our shareholders.”
OpenAI has also experienced several growing pains in recent months, including the loss of key executives, a trend that continued last week with the departures of CTO Mira Murati, head of research Bob McGrew and Barret Zoph, vice president of research.
OpenAI held a plenary session last Thursday after the board decided to consider restructuring the company into a for-profit business, according to a person with knowledge of the matter, who said that if the change happens, the nonprofit division will remain as a separate entity.
At that meeting, OpenAI CEO Sam Altman denied reports of plans for him to take a “giant equity stake” in the company, calling that information “simply not true,” according to the person present.
OpenAI president Bret Taylor told CNBC in a statement last week that while the board has talked about the issue, there are no specifics on the table.
“The board has had discussions about whether it would be beneficial to the company and our mission to compensate Sam with equity, but no specifics have been discussed or decisions made,” Taylor said.
When asked about whether the company will eventually go public, Friar told CNBC Thursday in the same on-air appearance that the company has “really big ambitions: ‘How do we continue to invest and what drives this technology?'” It’s calculation first. , and it’s not cheap, secondly, it’s a lot of talent, and then, of course, it’s all the normal operating expenses of a more traditional company.
Friar added, “To that end, we want to make sure we’re creative in where we can raise capital. For your perspective, sometimes that’s public markets, sometimes that’s debt markets, sometimes it’s project finance, structured finance There’s a lot to keep my fingers crossed as I look forward to the next few quarters.”