OpenAI Cuts Funding Target by $10 Billion Amid Tech Sell-Off
OpenAI has cut its funding target by $10 billion to $20 billion and lowered its valuation to $1.25 trillion amid a broader tech stock sell-off, aiming to close the round ahead of rival Anthropic.
OpenAI has reduced its latest funding target by $10 billion amid a tech stock sell-off driven by growing concerns over artificial intelligence spending, according to reports. The ChatGPT maker is now seeking to raise about $20 billion, with its targeted valuation dropping to $1.25 trillion from a previous $1.4 trillion.
OpenAI set Friday as the deadline for investor commitments, though the initial closing is expected to yield less than $20 billion after some participants reduced their allocations. A consortium of investors from the United Arab Emirates, including the state-backed technology fund MGX, is expected to be the largest participant in the funding round. As part of the deal, OpenAI will receive an option to lease new computing capacity developed in the region.
Other participants include venture capital funds such as Founders Fund, Coatue, Sequoia Capital, and Andreessen Horowitz, while wealthy private investors will be able to join a subsequent retail offering at the $1.25 trillion valuation. The funding push comes as the tech sector faces headwinds, with the Nasdaq index plunging 2.9% amid market jitters over massive AI infrastructure investments.
OpenAI, which is planning an initial public offering in 2027, is keen to close the round quickly to outpace rival Anthropic, as both target the same investor base. Meanwhile, reports indicate that Blackstone recently warned that Anthropic could face junk bond ratings following its IPO, potentially increasing financing costs for its ambitious infrastructure plans.
