OpenAI is raising an additional $10 billion from investors as part of a historic funding round, CFO Sarah Friar told CNBC’s Jim Cramer on Tuesday.
The new capital brings OpenAI’s record funding to “over $120 billion,” Fryer said in an interview on “Mad Money.” This far exceeds the ChatGPT creator’s original goal of $100 billion. OpenAI announced its first round of funding in late February, likely the last private fundraising round before a potentially blockbuster initial public offering (IPO).
Andreessen Horowitz, DE Shaw Ventures, MGX; TPG and T. Rowe Price They are participating in a new $10 billion pledge, Friar said. especially, microsofta long-time investor in OpenAI and one of its leading computing providers, is also participating in this portion of the funding round. While the relationship between Microsoft and OpenAI has evolved, Friar called Microsoft a “great partner” and praised CEO Satya Nadella for “being there early.”
“What’s really gratifying is that we were able to raise money across the ecosystem,” Fryer told Cramer, noting the involvement of venture capital firms, private equity players, mutual funds and government agencies. “It didn’t matter where you went. People really believed in this AI revolution and wanted to put their money into it,” she added.
Friar’s update on Tuesday comes about a month after OpenAI initially announced a $110 billion raise at a pre-money valuation of $730 billion. In that wave, Amazon Investing $50 billion, Nvidia and SoftBank each pledged $30 billion. In addition to the investment, Amazon announced a multi-year partnership with OpenAI. The companies will build custom models to support Amazon’s customer-facing applications. OpenAI also announced that it will expand its existing $38 billion contract with Amazon’s cloud computing arm by $100 billion over the next eight years.
“We’re very excited about this deal,” OpenAI CEO Sam Altman told CNBC after news of the funding last month. “AI will be everywhere. AI is transforming entire economies, and the world will need massive amounts of collective computing power to meet demand.”
Founded in 2015, OpenAI has experienced unprecedented growth since launching ChatGPT in late 2022. The viral chatbot attracts 900 million weekly active users, and the startup generated about $13.1 billion in revenue last year, CNBC reported.
Friar said about 60% of OpenAI’s revenue currently comes from consumers, and about 40% of its revenue is tied to business accounts. “In fact, that growth is accelerating. By the end of this year, it will be even more 50-50,” Frier said.
Providing services to other companies is “a very profitable business at scale, and that’s how you build a sustainable business model,” Friar added.
OpenAI is making inroads to win more enterprise customers as competition intensifies from AI startup Anthropic, which created the popular Claude chatbot. OpenAI’s business clients include: amgen, lowe’s, estee lauder and jet blueAccording to the website. On the other hand, Anthropic, which is receiving support, google and Amazon derive approximately 80% of their revenue from business accounts and list business customers as follows: Shopify, hubspot and spotify.
IPO plan
Both OpenAI and Anthropic are reportedly considering plans to go public. Anthropic is in talks to make its public debut in 2026, the Financial Times reported in December. Anthropic closed a $30 billion funding round in February, giving the startup a post-money valuation of $380 billion.
When asked by Cramer about a possible IPO, Friar said OpenAI is “starting to build on that outcome.”
she continued. “Long term, we have to create a company that is ready to become a public company. This (financing) round is somewhat at risk because we may be ready, but the market may not be ready. But I have to make sure the company is healthy and ready to face the public market. We see this all as part of the access journey.”
OpenAI eased its spending plans last fall after CEO Altman touted $1.4 trillion in long-term infrastructure spending. CNBC reported in February that OpenAI recently told investors it was targeting total computing spending of about $600 billion by 2030, a number more in line with OpenAI’s projected revenue growth.
OpenAI announced Tuesday that it is shutting down its short-form video app Sora, a decision seen as the company’s latest attempt to prioritize more profitable endeavors ahead of an IPO.
In response to Cramer’s question about Sora, Friar said, “We’re just facing a computational power deficit.” “We have really difficult decisions to make. I’ve talked to a lot of investors about that. We often put models on hold and don’t release features. And this was an example of having to prioritize. That doesn’t mean we won’t get back into the realm of creativity. It’s not a ‘never.’ It just means, “We have to make difficult choices.”
Disclosure: Cramer’s Charitable Trust owns stock in NVDA, AMZN, and MSFT.
