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OpenAI reportedly cuts funding target to $20B, with $11B secured

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OpenAI's latest funding round is not living up to expectations, according to multiple news reports summarised by TechCrunch.

OpenAI was previously reported to be raising $30 billion at a $1.4 trillion valuation, and later at a $1.25 trillion valuation, ahead of a planned IPO. The Financial Times reported on Friday that the company has since lowered its funding target to $20 billion. A first close is expected to be even lower than that.

Per the FT, the round will be led by a group of investors from the United Arab Emirates. A subsequent retail offering for wealthy individuals could bring the total to the $20 billion target.

A follow-up story in the Wall Street Journal added detail: the company has secured $11 billion so far, and its fundraising efforts had met with a "tepid" response from some large investors.

TechCrunch says it has reached out to OpenAI for comment. It also offers its own reading: the reported difficulties could be blamed, in part, on bad timing. Wall Street investors have become wary of heavy AI infrastructure spending, which has led to a major sell-off of tech stocks. TechCrunch adds that Anthropic's planned IPO could be facing challenges too.

Key facts

  • The FT reports OpenAI has lowered its funding target to $20 billion, down from earlier reported figures of $30 billion at a $1.4 trillion valuation (later reported at $1.25 trillion).
  • A first close is expected to be even lower than $20 billion; a retail offering for wealthy individuals could bring the total up to the target.
  • The WSJ says OpenAI has secured $11 billion so far and met a "tepid" response from some large investors.
  • The FT says the round will be led by a group of investors from the United Arab Emirates.
  • TechCrunch has asked OpenAI for comment; it links the trouble in part to investor wariness over heavy AI infrastructure spending and a tech stock sell-off.

Why it matters

OpenAI was earlier reported to be raising $30 billion at a $1.4 trillion valuation, then at $1.25 trillion, ahead of a planned IPO. A target now reported at $20 billion, with a first close expected to be lower still, would mark a step back from those figures. TechCrunch ties it, in part, to Wall Street's wariness of heavy AI infrastructure spending and a major sell-off of tech stocks.

Who it affects

Most directly OpenAI and the investors being courted, including the UAE group the FT says will lead the round and the large investors the WSJ describes as responding "tepid"ly. The FT also mentions wealthy individuals who could take part in a later retail offering. TechCrunch notes that Anthropic's planned IPO could be facing challenges too.

How to use it

There is nothing to act on directly. For readers following AI company financing, the useful markers are the figures as reported: a $20 billion target, $11 billion secured so far, and a first close expected to be below the target. The earlier $30 billion and $1.4 trillion figures are the benchmark to compare against.

How solid is it

This is secondhand. TechCrunch summarises reports from the Financial Times and the Wall Street Journal, and says it has reached out to OpenAI for comment; no OpenAI response is given. The $20 billion target and UAE lead come from the FT, and the $11 billion secured and the "tepid" response come from the WSJ. The explanation about bad timing is TechCrunch's own hedged assessment ("could be blamed"). The names of the UAE investors and of the hesitant large investors are not given.

Risks and caveats

The figures could change, and the reports are not confirmed by OpenAI. No valuation for the $20 billion round is stated; only the earlier $1.4 trillion and $1.25 trillion figures appear. The size of the first close is described only as "even lower" than $20 billion, and the amount and terms of the retail offering are not given. The source does not say whether the $11 billion is part of the first close. No timeline for the round or the IPO is provided.

“OpenAI’s latest funding round isn’t quite living up to expectations, according to multiple news reports.”

— TechCrunch