Key Points
- SoftBank’s Vision Fund will invest $500 million in OpenAI during its current $6.5 billion funding round.
- OpenAI’s valuation, set at $150 billion, depends on the company restructuring into a for-profit corporation.
- Apple has reportedly pulled out of the funding round, leaving SoftBank to make its first investment in OpenAI.
- OpenAI is working on restructuring its corporate model, moving away from nonprofit control to attract higher returns for investors.
According to a report from The Information, Japanese telecommunications giant SoftBank’s Vision Fund is set to invest $500 million in OpenAI as part of the artificial intelligence company’s ongoing $6.5 billion funding round. The investment will be made in convertible notes, which could later convert into equity. The funding round values OpenAI at $150 billion, making it one of the most valuable AI companies globally.
While SoftBank declined to comment on the investment and OpenAI has not yet responded to requests for confirmation, this would mark the Japanese firm’s first major investment in OpenAI, a company at the center of the recent AI boom. Led by Sam Altman, OpenAI is best known for creating ChatGPT, a generative AI model that has revolutionized AI technology and prompted a wave of investment in the sector.
OpenAI’s funding round is particularly notable for several reasons. The reported $150 billion valuation is contingent upon the company restructuring its corporate structure. OpenAI operates as a hybrid model with a nonprofit board overseeing its operations. Still, the company plans to transition into a fully for-profit corporation, which could remove the current profit cap for investors and potentially attract even more funding.
This potential shift in governance could be pivotal for the company, allowing investors to gain higher returns and enabling OpenAI to attract larger capital inflows in the future. According to sources familiar with the deal, the company’s nonprofit origins have made raising capital at competitive levels challenging compared to traditional for-profit enterprises in the tech space.
Interestingly, while SoftBank is making its first investment in OpenAI, The Information report also mentioned that Apple, which was expected to participate in the funding round, has decided to withdraw from its involvement. No official reason for Apple’s decision has been provided, though the company has been actively working on its AI initiatives.
The SoftBank investment signifies a strong vote of confidence in OpenAI, especially as the company works to restructure and scale up its business. With a strategic shift toward profitability and the backing of investors like SoftBank, OpenAI is positioning itself as a leader in the rapidly growing AI industry.
