OpenAI Reportedly Exploring Share Sale for $90B Valuation

US artificial intelligence (AI) startup OpenAI Inc. is reportedly exploring the option of potentially selling existing shares at a higher valuation than a few months earlier.

Two people with knowledge of the matter said the plan could raise the ChatGPT creator’s value between $80 billion and $90 billion, making it one of the world’s most valuable startups after SpaceX Corp. and ByteDance Ltd.

The target valuation is also a threefold increase from San Francisco-based OpenAI’s current value of $29 billion, which it secured from a $300 million share sale in April.

Under the terms of the proposed deal, employees can sell their existing holdings instead of OpenAI issuing new shares to generate new capital. Selling existing shares does not involve the creation of fresh capital for companies.

The people said the startup has started discussing the deal with investors, although the terms remain subject to change. Should an agreement be reached, the transaction would be the second major secondary share sale of the Microsoft Corp.-backed firm.

Elon Musk’s SpaceX and other established startups have conducted standard private share sales without undertaking an initial public offering (IPO). Such a method has allowed employees and investors to profit from the surging value of their holdings in the company.

Maximizing AI Popularity and Opportunities

OpenAI’s planned share sale came at a time of growing interest for AI startups following its popular generative AI chatbot ChatGPT launch in November 2022.

Its flagship large-language model (LLM) has become a major tech success story since its launch and has helped bolster the popularity of AI, describing the space as the next tech frontier.

OpenAI has raised $10 billion in primary funding through Microsoft’s backing this year, with the money allocated to developing new products and AI model training.

AI startups such as Inflection AI Inc. and Anthropic PBC have also performed their respective fundraising with high-profile investors in recent months.

The company is expected to bring in $1 billion in annual revenue as more firms incorporate the technology that introduced ChatGPT to the world in their businesses and products. Additionally, the AI assistant is receiving an upgrade that would allow it to talk to users.