OpenAI seeks $6.5 billion investment as costs continue to mount
OpenAI is seeking to raise $6.5 billion from investors with a further $5bn in credit from banks — valuing the AI startup at $150 billion.
The Microsoft-backed AI startup hasn’t yet confirmed the investment. However the funding round is reportedly led by Thrive Capital and may include further investment from Microsoft, which has already invested $13bn in the company.
The valuation, as reported by Bloomberg, would be significantly higher than the $86bn it was valued at earlier this year, and follows reports from last week that the company was seeking $1bn on a $100bn valuation.
Any potential investment could be what keeps OpenAI not just in the running, but in business. Concerns have been raised over the company’s longevity amidst skyrocketing spending as it aims to maintain its lead in the generative AI race.
Reports in August suggested OpenAI was on track to spend $7 billion on training and inference this year alone, with additional expenditures of around $1.5 billion on staff.
All told, the startup’s current rate of spending means it could rack up losses of around $5 billion, while its current revenue stream stands at between $2bn to $3.5 billion.
While costs are high across the industry, rival Anthropic’s current spending stands at around $2.7bn this year.
A key factor in OpenAI’s surging costs is the upkeep required to maintain its flagship services, such as ChatGPT. Estimates put the cost of keeping ChatGPT up and running at nearly $700,000 a day in 2023.
Rumored ‘Strawberry’ model could be a lifeline for OpenAI
Reports suggest OpenAI is considering charging as much as $2,000 a month for access to its future models, including one due for release soon, known as Strawberry. Current subscriptions to ChatGPT Plus cost $20 a month per user.
OpenAI reportedly plans to release the new model within weeks, with availability this autumn. This updated model has the ability to reason, such as solving math problems without having seen them before and even double-checking its own accuracy.
However, reports suggest it’s much slower. Sources told The Information it takes up to 20 seconds to answer a single question. That said, business users requiring accuracy will surely be willing to wait to ensure a correct result.
Strawberry will be offered on its own, but eventually built into ChatGPT as well.
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