OpenAI lands less than half of $30B funding goal, WSJ says

OpenAI has secured about $11 billion in commitments for its latest funding round. That is less than half of the $30 billion it first targeted, as nervousness about AI stocks cooled investor interest, The Wall Street Journal News Corp ↘ 1.23% reported late on Friday, October 30. The Journal said the deal values the ChatGPT maker at $1.25 trillion, below the $1.4 trillion it had hoped for, after some large investors showed "tepid" interest.wsj.com

The smaller round is a sign that private investors are growing cautious about AI valuations. OpenAI is trying to raise money before rival Anthropic's expected stock market debut.

A lower target

The Financial Times first reported that OpenAI cut its fundraising goal by $10 billion to about $20 billion. Investors had a Friday deadline to commit, and the "first close" was expected to raise less than $20 billion after some backers reduced their allocations, according to Reuters. CNBC confirmed on Saturday that OpenAI is seeking up to $20 billion. A person familiar with the deal told CNBC the round has not closed and its figures could still change.cnbc.com+1

To close the gap, wealthy individuals will be offered a later retail offering at the same $1.25 trillion valuation, Reuters reported, citing the FT. The Journal reported that OpenAI expects to raise more money in the coming weeks, according to Techmeme's summary of the article. OpenAI has not publicly confirmed the figures.reuters.com+1

Gulf money leads

A group of investors from the United Arab Emirates, including the state-backed technology fund MGX, is expected to provide the largest share of the money. The deal would also give OpenAI an option to lease newly built computing capacity in the region, according to Reuters. CNBC reported that the UAE investors are leading the round alongside Coatue. Founders Fund, Sequoia Capital and Andreessen Horowitz are also expected to take part, according to Markets Insider.markets.businessinsider.com+2

Selloff and an Anthropic rivalry

The cutback came as tech stocks sold off. The Nasdaq 100 fell sharply on Friday on worries about rising AI costs, Markets Insider reported. The Decoder said the selloff followed weak quarterly results from Google parent Alphabet ↗ 0.08%, Amazon Amazon.com, Inc. ↗ 2.06% and Intel ↗ 0.97%.the-decoder.com+1

The round is also competing with big tech companies for capital. Meta Platforms ↗ 2.36%, Alphabet and Microsoft ↗ 2.74% have been going to bond and equity markets to pay for their own AI buildouts, Investor's Business Daily noted.investors.com

Earlier, in a round of about $30 billion that could have valued it above $1.4 trillion, OpenAI had moved quickly to lock in commitments ahead of Anthropic's listing, expected in mid-November. SoftBank Group and MGX were among the backers in talks, according to The Daily Star, citing Reuters. OpenAI is pursuing its own listing in 2027, and the two companies are drawing on a similar pool of investors, Reuters reported.thedailystar.net+1