OpenAI raises $11 billion in first close at $1.25 trillion valuation

The money was wired on Friday, Bloomberg reported. The round is not closed. OpenAI expects the rest within weeks, and the total could reach about $20 billion, two thirds of the $30 billion it originally sought.

The first close is about a third of that original target. OpenAI had sought $30 billion at a $1.4 trillion valuation but scaled back after an AI-sector selloff, The Decoder reported. The new $1.25 trillion valuation is $150 billion below the $1.4 trillion target.

Investors

Coatue Management, T. Rowe Price, SoftBank, Sequoia Capital, Founders Fund, Andreessen Horowitz and a consortium from the United Arab Emirates are among the investors, The Decoder reported. The Financial Times reported a UAE group including state-backed fund MGX would be the largest participant.

The UAE consortium's participation includes more than cash. The Financial Times reported OpenAI would gain an option to lease newly developed computing capacity in the region as part of the deal.

OpenAI is also working with investment banks to bring in wealthy individual investors, The Decoder reported. The Wall Street Journal and Financial Times reported a tepid response from some large institutional investors, and the company has turned to family offices and high-net-worth individuals.

CNBC reported OpenAI told investors in February it targets roughly $600 billion in total compute spend by 2030.

Market backdrop

The round lands after a tech selloff. The Decoder reported that the Nasdaq 100 dropped 6.4 percent on Thursday but recovered somewhat on Friday, and that rising borrowing costs and heavy AI spending plans triggered the selloff.

OpenAI previously signaled it would go public this year but delayed those plans, TechCrunch reported. Reuters reported in mid-October that OpenAI accelerated fundraising ahead of Anthropic's expected public debut because both labs tap a similar investor base.

The company confidentially filed a prospectus with the SEC in June, but the listing timeline remains fluid. OpenAI needs money for substantial infrastructure commitments and to bolster its balance sheet if weak IPO markets delay a 2027 listing, investors familiar with the company told Reuters.

IPO timing

The Wall Street Journal reported a debut could come as early as early next year, while Reuters has reported a 2027 target. Sarah Friar, the chief financial officer, told employees in August the lab "will be a public company in 2027," CNBC reported.

Chief Executive Sam Altman said the following month that "right now would be an ill-advised moment to go public." Expectations now center on an IPO next year, TechCrunch reported.