OpenAI has received a fresh $4 billion revolving credit line, the ChatGPT manufacturer revealed on Thursday, a day after it concluded a $6.6 billion investment round that reinforced its status as one of the most valuable private companies in the world.
According to OpenAI, the borrowing facility will increase its liquidity to $10 billion, enabling the business to compete with tech behemoths like Alphabet-owned Google by purchasing expensive processing power, including Nvidia chips.
“This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities,” OpenAI’s finance chief Sarah Friar said.
The JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC credit lines are involved.
The company at the centre of the generative AI revolution got fresh funding on Wednesday from returning venture capitalists, including Khosla Ventures and Thrive Capital, at a valuation of around $157 billion.
Nvidia, a recent investment, and Microsoft, the company’s largest corporate sponsor, also contributed to the convertible note fundraising.
The successful transformation of the business into a profit-making enterprise and the elimination of the investor return cap are prerequisites for the conversion to equity.
The most recent investment was made available at the same time as senior leadership alterations, such as the sudden exit of long-time chief technology officer Mira Murati last week.
The majority of investors remain enthusiastic despite the personnel changes, since they anticipate substantial growth according to CEO Sam Altman’s estimates.
Despite a sharp increase in losses to almost $5 billion, the corporation is expected to make $3.6 billion in revenue this year. According to people familiar with the numbers, it anticipates a significant increase in sales to $11.6 billion the following year.
In addition, OpenAI is giving Thrive Capital a benefit that none of the other investors are receiving: the chance to invest an additional $1 billion at the same price in 2020 if the AI company meets its revenue targets.
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