OpenAI closes $40 billion funding round, largest private tech deal on record

OpenAI on Monday announced it had closed what amounts to the largest private tech funding round on record.

The $40 billion financing values the ChatGPT maker at $300 billion, including the fresh capital. It’s nearly three times the amount previously raised by a private tech company, according to PitchBook.

The valuation puts OpenAI behind only SpaceX at $350 billion and even with TikTok parent ByteDance among the world’s most richly valued private companies, according to CB Insights.

Japan’s SoftBank is leading the round with $30 billion, and is joined by a syndicate of other backers, including core investor Microsoft as well as Coatue, Altimeter and Thrive.

OpenAI said it plans use the fresh capital to “push the frontiers of AI research even further” and scale its compute infrastructure, according to a blog post. About $18 billion of the funding is expected to be used for OpenAI’s commitment to Stargate, the person familiar with the matter told CNBC. The joint venture between SoftBank, OpenAI and Oracle was announced by President Donald Trump in January.

The initial funding will be $10 billion, followed by the remaining $30 billion by the end of 2025, the person said. But the round comes with a caveat. It could be slashed by as much as $10 billion if the company doesn’t restructure into a for-profit entity by Dec. 31, CNBC confirmed earlier on Monday.

The provision ramps up pressure on OpenAI to pull off the for-profit conversion, a plan that will need the blessing of Microsoft and the California Attorney General, and has been challenged in court by Elon Musk, who was one of the co-founders of OpenAI in 2015, when it was started as a non-profit research lab.

The company’s current and unusual hybrid structure includes a capped-profit limited partnership created in 2019. The original nonprofit is the controlling shareholder and would be spun out as an independent entity if the company can restructure. OpenAI’s venture backers have received convertible notes that would turn into equity.

The largest private deal prior to OpenAI’s round was Ant Group’s $14 billion capital raise in 2018. After that was Juul Labs’ $12.8 billion raise in 2018 and DiDi Global’s $10.8 billion round the following year, according to PitchBook. Then comes Databricks’ $10 billion round in December and OpenAI’s own $10 billion round in 2023.

SoftBank and other investors are betting that ChatGPT’s explosive growth can continue. OpenAI said Monday that ChatGPT now has 500 million weekly users, up from 400 million last month. OpenAI also expects revenue will triple to $12.7 billion by the end of this year.

CEO Sam Altman wrote Monday in a post on X that though the ChatGPT launch was “one of the craziest viral moments i’d ever seen, and we added one million users in five days,” the company “added one million users in the last hour.”

The generative AI market is poised to top $1 trillion in revenue within a decade. Companies from Google and Amazon to Anthropic and Perplexity are racing to announce new products and features, especially as the race to build “AI agents” intensifies.

OpenAI last week announced some key changes in the C-suite, with CEO Sam Altman shifting his focus away from day-to-day operations and focusing more on research and product. Operating chief Brad Lightcap’s role will expand to oversee “business and day-to-day operations.”

OpenAI’s fundraising comes just after CoreWeave became the first pure-play AI company to make its public debut, though it’s been a tough start. After slashing its IPO price, the stock was unchanged in its first day on the market on Friday and fell more than 7% on Monday.

Mark Klein, CEO of SuRo Capital and an investor in OpenAI, told investors on his firm’s earnings call earlier this month that the next wave of anticipated IPOs in his portfolio included, “at some point in time,” OpenAI.

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