Key points
- OpenAI cuts its funding target to $20 billion
- OpenAI's first close may come in under $20 billion
- OpenAI's raise runs into Anthropic's IPO
OpenAI has cut the target for its latest funding round to $20 billion from as much as $30 billion, keeping its valuation at $1.25 trillion, the Financial Times reported on October 30.
OpenAI set October 30 as the deadline for investors to commit to the round. The first close is expected to raise less than $20 billion after some investors reduced their allocations, according to Reuters' account of the FT report. That account doesn't name the investors who cut back. OpenAI didn't immediately respond to a request for comment.
Later on October 30, The Wall Street Journal reported that OpenAI has raised less than half of its original $30 billion target in the round, which values the company at $1.25 trillion.
OpenAI lowered the valuation before it cut the amount
OpenAI first pitched investors a $1.4 trillion valuation. On October 22, CNBC and Bloomberg reported that OpenAI had lowered the valuation in the talks to $1.25 trillion while still seeking up to $30 billion, as we reported at the time. Investors from the United Arab Emirates and the investment firm Coatue were leading the round, CNBC reported then.
The October 22 reports described $1.25 trillion as OpenAI's valuation before new money. If that basis remains unchanged, a $20 billion raise would bring the valuation to about $1.27 trillion, by our calculations. That's about 49% above OpenAI's $852 billion valuation after its March round, which raised a record $122 billion.
OpenAI wanted the money before Anthropic's IPO
OpenAI had been pushing to lock in commitments before Anthropic's expected IPO in mid-November, Reuters reported on October 19, since the two AI labs court many of the same investors. Anthropic made its IPO filing public on October 26 and has applied to list on the Nasdaq under the ticker ANT. That filing left the offering price and share count blank. Our OpenAI IPO tracker follows OpenAI's own path to a listing.
The cut came on a day of heavy tech selling
The Nasdaq Composite fell 2.9% on October 30 to close at 25,437.00. That left the index 7.8% below its record close on October 6. Tech stocks fell on growing worries over heavy AI spending, Reuters reported.
After the market closed that day, S&P Global Ratings turned its outlook on Meta Platforms (META) negative, citing uncertainty over how long Meta's heavy capital spending will last.
