OpenAI wanted $30 billion and has $11 billion. Now it's asking wealthy individuals for the rest.
The Financial Times and the Wall Street Journal report that OpenAI's round came in well under plan, with some big investors lukewarm. OpenAI hasn't commented.
OpenAI has so far secured about $11 billion for a funding round it first pitched at $30 billion, according to the Wall Street Journal. The Financial Times reported that the target is now $20 billion and that the first close will land below even that.
Neither number comes from OpenAI. As of the reports I could read, the company hadn’t commented, and TechCrunch said it had reached out. Everything below is reported by others, from unnamed people familiar with the deal.
How the pitch moved in five weeks
TechCrunch tracked each step. On September 29 it reported OpenAI was in talks to raise $30 billion at a $1.4 trillion valuation. On October 22 it reported the same $30 billion at $1.25 trillion. Then came the cut to the target itself.
| Date | What was reported | Reported by |
|---|---|---|
| September 29 | $30B at a $1.4T valuation | TechCrunch |
| October 22 | $30B at a $1.25T valuation | TechCrunch |
| October 30 | Target cut to $20B, first close below that | Financial Times |
| October 30 | About $11B secured, “tepid” interest from some large investors | Wall Street Journal |
| October 31 | $20B target confirmed, round still open | CNBC, as relayed by The Next Web |
My arithmetic, not any outlet’s: $11 billion is about 37% of the original $30 billion and 55% of the new $20 billion. The valuation pitch dropped $150 billion, roughly 11%, before the target was touched.
Who is in, and who is being asked next
The Next Web, summarizing the FT, says investors from the United Arab Emirates, including the state-backed fund MGX, will likely be the largest backers. It lists SoftBank, Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz as planning to invest.
OpenAI set Friday as the deadline for commitments, the FT reported, and some investors reduced theirs. The Wall Street Journal reported that OpenAI told shareholders it expects to raise more in the coming weeks and will approach family offices and wealthy individuals. The FT described a later offering to wealthy individuals at the same $1.25 trillion valuation, which could bring the total to $20 billion.
One detail is worth keeping straight. The $20 billion is a ceiling the company is reportedly aiming for, not money in hand. The Next Web reports that CNBC’s source said the round is still open and the figures could change.
Why now
TechCrunch says the funding trouble “could be blamed, in part, on bad timing.” In a separate piece it wrote that Alphabet, Amazon, Meta and Microsoft have outlined more than $740 billion in capital spending this year, which it said has investors nervous. That piece reported the Nasdaq fell 2.9% on Friday and that Alphabet’s 12% drop on Thursday was its worst day on record. I wrote up the cash-flow side of that in the Alphabet negative free cash flow post.
The Next Web added that OpenAI plans to list as soon as early next year, per the WSJ, and that Anthropic plans to go public next month at a valuation of at least $1.5 trillion, per the FT. Those are reported plans relayed second-hand, not filed terms.
My read
I wouldn’t read this as OpenAI running short of money. Nothing in the reporting says that, and $11 billion is a large sum by any normal standard. What I do read in it is a change in who sets the price. A company that cuts its valuation pitch and then its raise target within five weeks is negotiating, not announcing.
It also sits next to the October argument over how OpenAI counts revenue, which I covered in the OpenAI revenue figure post. Whether investors are weighing that, I can’t say. No source links the two.
What I’d watch is the first close, since that will be an actual number instead of a leak. If it lands near $11 billion, the retail offering is doing a lot of work for the $20 billion total.
Note on sources
The Wall Street Journal article was paywalled, so I read only its opening paragraphs through a search excerpt, and the $11 billion and “tepid” details otherwise come from The Next Web and TechCrunch summarizing it. The FT piece was not readable, so its figures, and the Anthropic IPO detail, come from TechCrunch and The Next Web. The Alphabet, Nasdaq and capex numbers come from the TechCrunch piece listed below. The September 29 and October 22 entries in the table come from the TechCrunch pieces linked in source 2. OpenAI hasn’t confirmed any of it. The percentages are my calculations from reported figures.