OpenAI Cuts Its Funding Round to $20 Billion After a Tepid Response, and Turns to Wealthy Families for the Rest

SAN FRANCISCO - OpenAI has scaled back its latest fundraising. The ChatGPT maker is now seeking up to $20 billion in its latest round, down from a target of about $30 billion, CNBC confirmed on Saturday, citing a person directly familiar with the deal. The Financial Times first reported the $10 billion cut on Friday.

The FT said the round values OpenAI at $1.25 trillion after the new money. The company had first pitched investors on raising $30 billion at a $1.4 trillion valuation before lowering the price.

Screenshot: @FT on X

The money is coming in more slowly than OpenAI hoped. The Wall Street Journal reported that the company has secured about $11 billion so far, less than half of its original goal, and that interest from some large investors was “tepid.” OpenAI set Friday as the deadline for investors to commit, and some reduced their allocations, according to the FT, which said the first close will likely raise less than $20 billion.

To make up the gap, OpenAI told shareholders it expects to raise more in the coming weeks from family offices and high-net-worth individuals, the Journal reported. The FT described a later offering for wealthy individuals at the same valuation.

The round is still open, and the person who spoke to CNBC said the figures could change. OpenAI did not immediately respond to CNBC’s request for comment.

Screenshot: @CNBC on X

The backers are a familiar group. CNBC has reported that investors from the United Arab Emirates are leading the round alongside Coatue. The FT said U.A.E. investors, including the state-backed fund MGX, will likely be the largest contributors, with SoftBank, Founders Fund, Sequoia Capital and Andreessen Horowitz also planning to invest.

The timing is rough. The cut follows a week in which investors questioned whether Big Tech’s spending on data centers and chips will pay off. Alphabet had its worst trading day ever on Thursday after its search revenue missed expectations, and on Friday Intel fell 25% on weak guidance, Micron dropped 5.5% and Nvidia slipped 4%, CNBC reported. Amazon’s results showed the same strain, with AI spending turning its free cash flow negative.

OpenAI is also no longer the only AI lab asking the market for money. The Journal reported that OpenAI plans to go public as soon as early next year. Its rival Anthropic made its IPO filing public last Monday, and the FT has reported that it plans to list next month at a valuation of at least $1.5 trillion.

Even at the lower price, $1.25 trillion would leave OpenAI among the most valuable private companies ever. The question for the next few weeks is how much of the remaining $9 billion wealthy families are willing to write checks for.