A raise of about $11 billion has happened at OpenAI, representing the opening slice of a new funding round pricing the AI company at $1.25 trillion. Bloomberg reported the funding round, citing people familiar with the matter who were not authorized to speak publicly.
OpenAI received the wired funds on Friday. A source stated that this is just the first part of a deal that could grow to $20 billion in the next few weeks.
In a separate report on Friday, The Information said OpenAI plans to update its investors next week after locking in the $11 billion.
A shrinking target
What stands out most is the money OpenAI did not receive. According to Bloomberg, the company originally wanted a $1.4 trillion valuation and hoped to raise $30 billion or more. However, those numbers dropped. The company’s valuation fell to $1.25 trillion, and the $20 billion limit people are talking about now is way lower than the initial target.
To put things in perspective, Bloomberg noted that OpenAI raised $122 billion back in March with an $852 billion valuation. For a company that usually leads the pack in securing AI investments, this current round comes across as surprisingly small by comparison.
Why the mood has soured
Timing is everything here. Investor excitement cooled off while this round was happening. People became increasingly nervous about how much cash is being poured into hardware for AI. In addition, there are concerns over potential roadblocks for new data centers after the US midterms.
According to TechCrunch, a Democratic midterm win and rising public frustration over data centers have scared investors, creating fears of stricter rules in the near future.
OpenAI isn’t the only company feeling the chill from cautious investors. According to TechCrunch, people looking to buy shares in rival Anthropic’s IPO are aiming for a valuation as low as $1.1 trillion . This represents a big drop from the nearly $2 trillion figures being discussed from just a month back.
IPO plans on hold, for now
OpenAI has dropped hints about going public for a while. However, the AI company keeps delaying the move and relying on private money instead.
The company’s IPO was originally expected sometime next year. OpenAI President Greg Brockman has also indicated that 2027 is a more realistic target for the company to be ready for the stock market.
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