OpenAI in Talks for Deal That Would Value Company at $80 Billion

SAN FRANCISCO — OpenAI is in talks to complete a deal that would value the company at $80 billion or more, nearly triple its valuation less than six months ago, according to a person with knowledge of the discussions.

The company would sell existing shares in a so-called tender offer led by venture firm Thrive Capital that would make OpenAI the most valuable startup in San Francisco, that person said. It was reported earlier by The Information.

OpenAI declined to comment.

Nearly a year after OpenAI sparked an artificial intelligence boom with the release of online chatbot ChatGPT, the Silicon Valley deal-making machine continues to pump money into the field’s leading companies.

Amazon said last month that it would invest up to $4 billion in another San Francisco startup, Anthropic, one of OpenAI’s primary competitors. Over the summer, Cohere, a company founded by former Google researchers, raised $270 million, bringing its total funding to more than $440 million. Inflection AI, founded by a former Google executive, raised a $1.3 billion round, bringing its total to $1.5 billion.

In January, Microsoft invested $10 billion in OpenAI, bringing its total investment in the company to $13 billion. In March, Character.ai, another startup founded by former Google employees that builds online chatbots, raised $150 million in a funding round that valued the company at $1 billion.

A month later, venture capital firms Thrive Capital, Sequoia Capital, Andreessen Horowitz and K2 Global agreed to buy OpenAI shares in a tender offer, valuing the company at around $29 billion.

Now, Thrive is in talks to lead another tender offer that values the company at $80 billion or more, the person with knowledge of the deal said. OpenAI is not issuing new shares. The deal would allow the company’s employees to sell their existing shares.

Along with tech giants such as Google, Microsoft and Meta, the AI startups are among a small group of companies capable of building chatbots such as powerful ChatGPT and similar AI systems.

Funding for other startups has fallen in recent years, as investors have favored profits over growth. But investor interest in AI startups remains the exception, because many believe artificial intelligence has the potential to upend current technologies and spur growth across the industry.

When it was released at the end of last year, ChatGPT captured the imagination of millions of people with its knack for answering questions, writing term papers and poetry, and generating computer code.

As the chatbot’s popularity grew, the wider tech industry embraced what is called generative artificial intelligence: technologies that can generate text, images and other media on their own.

The result of more than a decade of research inside companies including OpenAI and Google, generative AI technologies are poised to remake everything from internet search engines such as Microsoft Bing to digital tutors to email programs.

Thousands of companies are exploring this new area, but only a few have the resources to build the technology from the ground up. These companies have an unusual blend of experienced researchers, enormous ambition and large amounts of money.

This article originally appeared in <a href="https://www.nytimes.com/2023/10/20/technology/openai-artifical-intelligence-value.html">The New York Times</a>.