OpenAI Secures $40 Billion Funding Round Led by SoftBank Group

OpenAI is on the verge of securing a historic $40 billion (approximately Rs. 3,43,265 crore) funding round spearheaded by SoftBank Group. This event could potentially mark the largest fundraising effort in history, as per sources familiar with the situation. Investors currently engaged in discussions to join this initiative include Magnetar Capital, Coatue Management, Founders Fund, and Altimeter Capital Management, as reported by Bloomberg.

The Illinois-based hedge fund, Magnetar Capital, is poised to contribute as much as $1 billion (around Rs. 8,581 crore), according to the Bloomberg report.

Should this funding round reach completion, it would elevate OpenAI’s valuation to an astonishing $300 billion (approximately Rs. 25,74,492 crore), nearly double its prior figure of $157 billion (roughly Rs. 13,47,177 crore) achieved during its last fundraising campaign in October. Research firm PitchBook identifies this round as the largest fundraising for a private entity ever.

Details of the Funding Deal

As part of the agreement, SoftBank is set to invest an initial $7.5 billion (around Rs. 64,354 crore), with an additional $2.5 billion (approximately Rs. 21,451 crore) coming from a consortium of investors. A subsequent tranche of $30 billion (roughly Rs. 2,57,430 crore) is anticipated later this year. Out of this, SoftBank is expected to contribute $22.5 billion (about Rs. 1,93,069 crore), while the remaining $7.5 billion will be supplied by the investor group.

In reaction to this news, shares of SoftBank experienced a drop of up to 4.7% in Tokyo, raising concerns over the financial ramifications of such a substantial investment. Furthermore, the company’s credit default swaps have widened, indicating investor anxiety regarding its financial vulnerability.

OpenAI’s Rapid Growth

This development occurs as OpenAI is undergoing exponential growth, largely fueled by the increasing adoption of artificial intelligence technologies globally. The company based in San Francisco is expected to more than triple its revenue to $12.7 billion (approximately Rs. 1,08,965 crore) this year, bolstered by its premium AI software products.

Insider information reveals that OpenAI generated $3.7 billion (around Rs. 31,745 crore) in revenue last year, anticipating sales to more than double to $29.4 billion (about Rs. 2,52,250 crore) by the following year. Despite these encouraging revenue predictions, OpenAI is not expected to achieve cash-flow positivity until 2029, a year in which it anticipates revenue will exceed $125 billion (roughly Rs. 10,72,562 crore).

Strategic Investment Focus

This agreement also underscores SoftBank’s proactive stance towards artificial intelligence, having already allocated billions to the Stargate Project, a Texas-based AI infrastructure joint venture involving OpenAI, Oracle, and MGX.