According to reports, Tiger Global will join OpenAI funding round alongside several major investors like Thrive Capital and Microsoft. Tiger Global Management is gearing up to participate in OpenAI’s latest multi-billion-dollar funding round, potentially boosting the company’s valuation to $150 billion, according to sources cited by The Information. This comes as OpenAI, the developer of ChatGPT, continues to attract global interest in generative AI technology.
Tiger Global is reportedly in discussions alongside several notable investors, including Thrive Capital, Microsoft, Nvidia, Apple, G42, and Khosla Ventures. Thrive Capital, founded by Josh Kushner, is expected to commit $1 billion and lead the investment round.
Earlier reports from Bloomberg revealed that OpenAI, under the leadership of Sam Altman, is targeting $6.5 billion in new funding. The company is also seeking an additional $5 billion through a revolving credit facility with banks.
OpenAI’s Rapid Growth and Financial Challenges
Tiger Global will join OpenAI funding round to help increase the company’s valuation to $150 billion. OpenAI has grown tremendously since its breakout success with ChatGPT, released in late 2022. As of this year, OpenAI’s valuation had already surged to $80 billion, a sharp rise from $29 billion in 2022. The company’s revenue reportedly reached $2 billion earlier in 2024.
Despite these numbers, OpenAI faces financial hurdles. The company is projected to incur losses nearing $5 billion by year-end, driven by massive expenditures of $8.5 billion on AI development and staffing. The firm’s continued push for innovation, including the release of new AI models like “Strawberry” and “o1,” is central to its growth strategy.
Collaborating on AI’s Role in Energy
In recent developments, OpenAI’s CEO Sam Altman joined leaders from Nvidia, Microsoft, Google, Amazon, and energy companies at the White House to discuss AI’s role in energy infrastructure. The meeting focused on aligning public and private efforts in addressing AI’s energy consumption, data center needs, and semiconductor manufacturing. Reports suggest that Tiger Global will join OpenAI funding round as the AI firm continues to develop advanced models like “Strawberry.”
This funding round marks the largest for OpenAI since Microsoft’s major investment in early 2023. While the company continues to thrive, with weekly active users doubling to 200 million since late last year, its financial future remains uncertain. OpenAI’s focus remains on advancing AI technology, even as it faces pressure to balance growing expenses with revenue growth.
Founded in 2015 by Sam Altman and Elon Musk as a nonprofit, OpenAI transitioned to a commercial model in 2020, marking a shift in its operations. Despite challenges, OpenAI has retained its position at the forefront of the AI industry.
Concerns About Financial Viability and Risks
Despite the confidence shown by Tiger Global and others, there are concerns about OpenAI’s financial future. OpenAI is projected to incur losses of up to $5 billion by the end of this year, a stark contrast to the $3.4 billion in revenue it reported earlier. With such heavy investments into research, staffing, and infrastructure, OpenAI’s expenses are mounting rapidly. While this funding round may provide much-needed financial support, it also raises the question of whether OpenAI can sustain its growth without burning through massive amounts of capital.
Furthermore, the AI industry is highly competitive, with companies like Google, Microsoft, and Anthropic also investing heavily in similar technologies. Tiger Global’s decision to join OpenAI’s funding round reflects optimism, but it also exposes them to risks associated with high spending and the rapidly evolving nature of AI technology. If OpenAI’s growth does not keep pace with its expenditures, even large funding rounds like this one may not be enough to secure long-term financial stability. Thus, while Tiger Global’s involvement in OpenAI’s funding round highlights the promising potential of AI, it also underscores the financial challenges that lie ahead for the company.
Also Read: Everything You Want to Know About The OpenAI o1 Language Model.
