This information has been updated to show that the Microsoft investment was finalized in January. This money reported from the venture capitalists, which is a part of an offer, is separate from the funding Microsoft provided.
TechCrunch has obtained information that OpenAI, the organization responsible for the well-known ChatGPT artificial intelligence system, has gained support from additional benefactors.
Several venture capital firms including Tiger Global, Sequoia Capital, Andreessen Horowitz, Thrive and K2 Global are investing in new shares based on documents reviewed by TechCrunch. Additionally, sources report that Founders Fund is also investing. All of this results in the VCs contributing around $300 million worth of funds at a value between $27 and $29 billion. It has been revealed that the funding released by Microsoft, which finalized in January, is not part of the same investment. Our source corroborated that the financial commitment Microsoft was making is close to $10 billion.
If this is right, this will be the completion of the offer that the Wall Street Journal reported was coming in January. We checked and saw that at that point negotiations began, driven by the sudden widespread interest in OpenAI and its activities.
Contact has been made with the investors noted here as well as OpenAI. This article will be updated as more information is collected. OpenAI declined to comment on the proposed deal, separate from the one that Microsoft concluded in January.
Microsoft’s decision to put money into OpenAI has more to do with its own business strategy than just being a financial partner. Microsoft is planning on using OpenAI’s technology for different aspects of its operations.
It appears that the investment has been completed, with the investors signing the documents and transferring the money. All that remains is for OpenAI to sign the paperwork. It is anticipated that this investment will be announced next week.
In total, foreign investors control more than 30% of OpenAI, according to the source.
Based on PitchBook data, Peter Thiel had previously made an investment, but it looks like it is the first time Founders Fund will be investing. K2 Global, with one partner, Ozi Amanat, and Thrive are likewise making initial investments into the startup. The data suggests that Sequoia, A16Z, and Tiger Global were prior investors in the company but had divested their stakes; the recent investment will get them involved again.
Many tech firms, Tiger and Sequoia included, have faced challenges due to the economic recession in the past twelve months; many venture capitalists have deliberately decreased their investing activity, opting to hold onto their resources until the market situation improves and more attractive investment opportunities arise.
Because investors are presently looking for AI-based companies to invest in, OpenAI is probably considered a desirable option.
The source suggested that the choice to provide resources to OpenAI was likely used as a means of trying to show they had a profitable investment. Venture capital can be unreliable, with one day you can have a successful business and the next day be failing.
OpenAI has many knowledgeable engineering groups working on a range of topics, but lately a lot of focus has been on GPT, short for Generative Pre-trained Transformer. These are a set of OpenAI’s large language models that can be accessed using third party application programming interfaces (APIs).
OpenAI’s generative AI service, ChatGPT, was released at the conclusion of November 2022. ChatGPT is based on GPT, allowing people to submit inquiries and receive comprehensive answers. Its immense popularity has been established by SimilarWeb, who recorded that more than 1 billion individuals had visited the website in the month of February alone. These statistics not include those using the technology through other sources.
Generative AI is gaining a lot of attention at this time, but OpenAI has experienced some disputes, especially involving their well-known ChatGPT product. Individuals have raised doubts concerning how honest the chatbot is, if it can be considered a “virus”, its approach regarding privacy, if it can be made to say vile words or incorrect statements, and with the increased number of companies entering the AI development realm, there are open questions about the veracity of OpenAI’s GPT branding eventually.
OpenAI admitted that further progress still needs to be made. Simultaneously, they are continuing to create offerings and enhance them. In February, they unveiled a paid variation of ChatGPT, known as ChatGPT Plus, which provides a more efficient user experience. This was further updated with multimodal LLM GPT-4 in March.
The main factor that is likely to draw investors to OpenAI’s proposition and lead to its valuation is the fact that not only does it have promising technology, but it has a growing ecosystem around said technology.
In addition to the many people who have enjoyed using ChatGPT, hundreds of businesses of all sizes have started to incorporate GPT and ChatGPT into their offerings. This has motivated some tech giants to expedite their own endeavors in generative AI. Google has released Bard, and Meta has created LLM to rival GPT.
Despite the intense competition in the field of AI, OpenAI stands out due to its distinct focus since its founding in 2015, despite shifting away from its original non-profit model. AI could be a revolutionary force someday, but as of now, OpenAI may be the front runner in this space.
Sam Altman, the co-founder and CEO of a company, spoke at an AI conference recently, declaring that they have been hard at work on the project for seven years and are gaining more and more trust that it will work out. He attributes its success to their dedication and unwavering attention to every single detail over a prolonged period. Most people are not prepared to take the necessary action.
In addition to ChatGPT, OpenAI has another Artificial Intelligence based program, Dall-E, which saw a big improvement in July 2020. They also have a voice recognition tool named Whisper AI.
Microsoft is trying to join the OpenAI API with its Azure computing structure to bolster the necessity of the models. Furthermore, they declared a GPT-4 association in March to heighten Bing, which is a major part of Microsoft’s endeavors to rival Google’s search facilities.
