
OpenAI Surpasses SpaceX, Becoming World’s Most Valuable Private Company
OpenAI Surpasses SpaceX to Become the World’s Most Valuable Private Company
As per a recent report, a completed stock deal has led to a massive surge in OpenAI’s valuation to $500 billion. This valuation places OpenAI as the world’s most valuable private company.
OpenAI employees, both present and former, reportedly sold about $6.6 billion in shares to a consortium of investors that included reputable names like Thrive Capital, SoftBank, Dragoneer Investment Group, Abu Dhabi’s MGX and T. Rowe Price. The deal valued the ChatGPT-maker at a figure quite above its previous valuation of $300 billion.
OpenAI’s New Valuation Leaves Behind SpaceX
OpenAI’s valuation outshone Elon Musk’s SpaceX, which was valued at $400 billion during an insider share sale this summer, as per a Bloomberg report. The high stakes in OpenAI’s future, given the current boom in the artificial intelligence (AI) sector, might have influenced some OpenAI shareholders to hold onto their stock.
OpenAI and Microsoft Move to Restructure
Last month, OpenAI and Microsoft, an investor in the startup, proposed a non-binding agreement to restructure the ChatGPT-maker into a for-profit company. However, the details of this new arrangement remain undisclosed.
Microsoft’s Investments in OpenAI
Microsoft invested $1 billion in OpenAI in 2019, followed by another $10 billion in early 2023. Microsoft’s investments came with terms that granted them exclusive access to sell OpenAI’s software on its Azure cloud computing provider, along with preferred access to OpenAI’s technology.
OpenAI’s Transition to For-Profit Structure
OpenAI’s restructuring would pave its way to pursuing an initial public offering. This transition would allow the company to raise more capital to fund its AI development efforts. Despite the company’s billion-dollar annual revenue due to the rising demand for AI tools, OpenAI is yet to turn a profit, as it continues to invest heavily in AI research and infrastructure.
OpenAI’s Change in Direction Leads to Disagreement with Co-Founder Elon Musk
From its inception, OpenAI has been governed by a non-profit arm. Its decision to transition to a capped for-profit structure led to a disagreement with co-founder Elon Musk, who left the company in 2018 after a discord with CEO Sam Altman over the company’s direction.
OpenAI plans to complete the conversion to a new corporate structure by the end of this year, subject to regulatory approval in California and Delaware.
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