Despite raising over $60 billion in venture capital, OpenAI seems to be burning through cash faster than it can raise it.
Mere months after wrapping up a $40 billion funding round, the AI company is now said to be reopening the books in search of more money, according to Wired. Investors both new and old are now being asked — again — to consider pouring funds into the company, two unnamed sources told Wired.
That last round, which was said to be closed on March 31st, sent OpenAI's valuation to a whopping $300 billion at the time. The funding was led by Japanese multinational investment firm SoftBank, which committed to covering $30 billion of the round — the largest private tech investment ever recorded.
There's just one wrinkle: the funds roll out in two tranches, with $10 billion dispersed immediately, and $30 billion only available if OpenAI restructures to a for-profit company. If it doesn't, the Wall Street Journal reported back in March, SoftBank has the option to withhold $20 billion, cutting the historic funding round off at the knees.
That stipulation has OpenAI at a crossroads. The company originally began as a nonprofit research lab, an organization model founding investor Elon Musk has sued the company to maintain, and which the company's dominant shareholder, Microsoft, is not particularly interested in changing.
In May, CEO Sam Altman reaffirmed the company's commitment to remaining nonprofit in an all-hands email to employees.
"OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit," the email read. "That will not change."
On the flipside, OpenAI's backers are pretty desperate to see their massive stakes transformed into equity, as would be the case if the company restructures.
As the WSJ notes, if OpenAI fails to go for-profit, it would likely become incredibly difficult for the company to keep raking in these massive cash injections — something it desperately needs as it burns through billions of dollars each year.
It's a lot of pressure from both sides, to say the least. The company needs to restructure if it hopes to keep shoveling money into the AI furnace, but it has to clear some massive hurdles to do so, which probably explains the last-ditch effort to reopen the books to new investors.
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