
OpenAI, the company responsible for developing the ChatGPT large language model, has secured an extra $6.6 billion in funding from institutional investors, pushing the private company's valuation to $157 billion.
Participating in the funding round were venture capital firms Thrive Capital and Khosla Ventures, along with tech giants Nvidia and Microsoft.
OpenAI secured the funding by issuing convertible debt to investors, which will be converted to equity if the company successfully transitions to a for-profit business entity without constraints like profit limits on returns and dependence on nonprofit governance frameworks.
It is said that OpenAI is in the process of transforming the company into a strictly for-profit business model, a change that will involve navigating regulatory hurdles and sparking concerns about the legality of the transformation.
After OpenAI announced its intention to change its business model, Elon Musk, who is a co-founder of OpenAI, condemned the supposed change as "unlawful."
Nevertheless, in California, where OpenAI is based, nonprofit corporations are permitted to transition to for-profit models by following a intricate procedure. This involves initially converting the entity into a for-profit stock corporation and subsequently into a limited liability corporation (LLC).
In order to support its valuation of over $150 billion, OpenAI is looking to broaden its sources of income by investigating premium subscription options priced at over $2,000 per month. By September 2024, OpenAI announced that it had reached 1 million users using its range of products, marking a 67% growth from April 2024.
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