SAN FRANCISCO/BENGALURU (Sept 28): Thrive Capital is investing more than US$1 billion (RM4.12 billion) in OpenAI's current US$6.5 billion fundraising round, and it has a sweetener no other investors are getting: the potential to invest another US$1 billion next year at the same valuation if the artificial intelligence (AI) firm hits a revenue goal, people familiar with the matter said on Friday.

OpenAI is also predicting its revenue to skyrocket to US$11.6 billion next year from an estimated US$3.7 billion in 2024, the sources said, speaking on condition of anonymity. Losses are expected to be as much as US$5 billion this year, depending largely on spending on computing power that could change, one of the sources added.

The current funding round, which comes in the form of convertible debt, is expected to close by the end of next week, and could value OpenAI at US$150 billion, cementing its status as one of the most valuable private companies in the world.

That valuation depends on pulling off a complicated restructuring to remove the control of its non-profit board, and also remove a cap on investment return to investors, a plan first reported by Reuters. There is no specific timeline when the conversion could be completed.

Thrive, which also led OpenAI's previous funding round, is offering US$1.2 billion from a combination of its own fund and a special purpose vehicle for smaller investors. Other investors on the new round include Microsoft, Nvidia and Khosla Ventures.

The others were not given the option for future investment at the current price, sources said. OpenAI's valuation has soared quickly, and if it continues to do so, Thrive could find itself increasing its stake next year at a discounted price.

Reuters was not able to determine the revenue target associated with the option for Thrive, which was founded by Joshua Kushner.

Thrive and OpenAI declined to comment.

OpenAI's revenue expectations far exceed chief executive officer Sam Altman's earlier projection of US$1 billion in revenue this year. The main revenue sources are sales of its services to corporations and subscriptions to its chatbot.

Its flagship product, ChatGPT, is expected to bring in US$2.7 billion in revenue this year, jumping from US$700 million in 2023. The chatbot service, which charges a US$20 fee every month, has about 10 million paying users.

The financials and details of Thrive's additional option were first reported by The New York Times on Friday.

Meanwhile, Apple has left negotiations to participate in the funding round expected to raise about US$6.5 billion, The Wall Street Journal (WSJ) said on Friday.

The tech giant recently fell out of talks for the round, set to close next week, the newspaper said, citing a person familiar with the matter.

The report added that Microsoft is expected to invest about US$1 billion, after having already poured US$13 billion into the company.

Last month, the WSJ first reported that Apple was in the talks, as part of OpenAI's new fundraising effort that could value the ChatGPT maker above US$100 billion.

The high valuation is a result of the AI arms race OpenAI sparked with the launch of ChatGPT in late 2022, spurring companies across industries to invest billions in the technology to stay ahead of the competition and capture market share.

Uploaded by Tham Yek Lee