New York: Thrive Capital is set to invest over $1 billion in OpenAI’s current $6.5 billion fundraising round, with an exclusive opportunity that no other investors are receiving: the option to invest an additional $1 billion next year at the same valuation, contingent upon the AI firm meeting its revenue targets, sources familiar with the matter revealed on Friday.
OpenAI anticipates its revenue to soar to $11.6 billion in 2025, up from an estimated $3.7 billion in 2024, according to these sources, who spoke on the condition of anonymity. The company expects losses to reach as much as $5 billion this year, largely due to significant expenditures on computing power, which may fluctuate, one source added.
This fundraising round, structured as convertible debt, is projected to close by the end of next week, potentially valuing OpenAI at $150 billion, solidifying its position as one of the world’s most valuable private companies. Achieving this valuation hinges on a complex restructuring plan aimed at relinquishing control from its non-profit board and removing the cap on investor returns, a strategy first reported by Reuters. There is currently no specific timeline for the completion of this conversion.
Thrive Capital, which also led OpenAI’s previous funding round, is contributing $1.2 billion from a combination of its own fund and a special purpose vehicle designed for smaller investors. Other participants in this funding round include Microsoft, Apple, Nvidia, and Khosla Ventures, but they were not offered the future investment option at the current valuation, sources indicated. Given OpenAI’s rapid valuation increase, Thrive may be positioned to boost its stake next year at a favorable price if the trend continues.
Reuters could not ascertain the specific revenue target linked to Thrive’s investment option, which was founded by Joshua Kushner. Both Thrive and OpenAI declined to comment on the matter.
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OpenAI’s revenue projections significantly exceed CEO Sam Altman’s earlier forecast of $1 billion for this year. The primary revenue streams include sales of services to corporations and subscriptions to its chatbot. The flagship product, ChatGPT, is expected to generate $2.7 billion in revenue this year, a substantial increase from $700 million in 2023. The chatbot service, which charges a monthly fee of $20, currently boasts approximately 10 million paying users.
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The financial details regarding Thrive’s additional investment option were first reported by the New York Times on Friday.
