OpenAI Plans Share Sale for $86B Valuation
OpenAI is not leaving anything to chance as it seeks to take full advantage of the artificial intelligence boom. The parent company behind the popular Chatbot ChatGPT reportedly plans to sell existing employees’ shares at an $86 billion valuation. Reports indicate the company is negotiating with potential investors as it seeks to issue a tender offer that will affirm its status as the most valuable AI startup.
OpenAI Shares Sale
The sale of the existing shares is more than welcome as it would prevent OpenAI from issuing new shares to raise fresh capital. The issuance of new shares could significantly dilute existing holdings, which the company wants to avoid at all costs.
The sale should attract strong interest from investors who have been eying a piece of the company that remains the poster child of the artificial intelligence revolution. The company already boasts of Microsoft as its biggest shareholder, with a 49% stake. The software giant took a massive stake in the company after investing about $13 billion as it sought to gain exposure to its AI innovations.
The sale of the existing shares for $86 billion would propel OpenAI above Stripe and Chinese online retailer Shein. In addition, it would cement the company’s status as the most valuable closely held company behind SpaceX and ByteDance, the company behind the viral video app TikTok.
An $86 billion valuation would be almost three times what the artificial intelligence startup was valued at the start of the year. However, it would not be surprising as companies exposed to the revolutionary technology have seen their valuation explode amid solid institutional investor interest. Nvidia is one of the companies that have exploded, joining the trillion-dollar club and becoming the go-to chip for powering revolutionary technology.
OpenAI is regarded as one of the companies at the forefront of generative AI, as its technology is used to create content from videos to poetry out of simple commands. The integration of its Chatbot on the Microsoft search engine, Bing, has only underscored its capabilities. The integration forced Alphabet Google to respond with its own Chatbot dubbed Bard as it sought to safeguard its search engine edge.
OpenAI Revenue Prospects
Since its unveiling in November last year, ChatGPT has been integrated into major corporations to help in various operations. The integration has already set OpenAI on course to generate over $1 billion in annual revenues as businesses continue to adopt the technology behind the Chatbot. Reports indicate ChatGPT is earning over $80 million in revenue monthly for OpenAI, making it one of the most-prized possessions in the burgeoning segment.
While OpenAI allegedly lost close to $540 million in 2022 in developing ChatGPt, it is on course to recoup the losses and generate significant returns, given the increased adoption. ChatGPT edge stems from creating features and privacy safeguards that have made it an ideal tool for use in the business environment. Many businesses are increasingly using it to boost revenue and enhance product development.
OpenAI is already accelerating plans to monetize ChatGPT in a move that could see it sell premium subscriptions and offer companies paid access to the application programming interface.