OpenAI, supported by Microsoft, valued at $80bn post-deal

The company will sell its existing shares in a ‘tender offer’ led by venture firm Thrive Capital, similar to a deal from early last year

According to the New York Times, Microsoft-backed OpenAI has finalized a deal valuing the artificial intelligence company at $80 billion or higher. The deal involves selling existing shares in a “tender offer” led by venture firm Thrive Capital. This arrangement allows employees to cash out their shares instead of participating in a traditional funding round aimed at raising capital for the business.

OpenAI did not immediately respond to a request for comment. Last year, the artificial intelligence firm entered into a comparable agreement. Venture-capital firms such as Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global agreed to purchase OpenAI shares in a tender offer, valuing the company at approximately $29 billion, as reported. OpenAI has received significant funding in the past, including a $10 billion investment from Microsoft in January 2023, as well as funding in 2019 and 2021.

The release of OpenAI’s ChatGPT in late 2022 has sparked interest in AI, leading companies to explore ways to leverage its capabilities. AI has been integrated into various products, including Microsoft’s Bing search engine, as the company continues to advance its own AI developments. On Thursday, OpenAI unveiled Sora, a tool capable of generating videos from text prompts. The day prior, it announced plans to enhance ChatGPT with deeper memory capabilities to remember more user interactions.

OpenAI CEO Sam Altman has reportedly been in discussions to acquire a chip manufacturer or enhance the company’s access to the costly AI chips that power its tools.

The most recent investment represents the largest backing of the company since a brief period of turmoil in late 2023. During this time, OpenAI CEO Sam Altman was dismissed by the company’s board before being reinstated following outcry from employees.

These substantial investments in OpenAI have drawn the attention of regulators. European Commission officials announced in early January that they would investigate whether Microsoft’s support raises antitrust concerns. Similarly, on January 24, the Federal Trade Commission in the US stated that it was examining whether investments from major tech companies, including Microsoft, Google, and Amazon, into AI firms like OpenAI, pose a threat to competition.