OpenAI sought $30 billion, but only ended up raising $11 billion

OpenAI is now valued at $1.25 trillion. It has raised $11 billion in this latest funding round.

Image: The Verge

According to Bloomberg, this valuation puts OpenAI among the highest-valued companies worldwide. Just a few months ago, it secured $122 billion from investors at a $852 billion valuation. In less than a year, its valuation has risen by nearly 50% — the figures are so large they feel almost surreal.

But funding news headlines usually only tell half the story. When you place the target fundraising amount next to the actual sum raised, the narrative goes in a completely different direction.

OpenAI originally planned to raise $30 billion at a $1.4 trillion valuation. But as tech stocks dropped, the midterm election results came out, and public sentiment toward AI remained far from enthusiastic, it ended up raising less than half of its planned target at the $1.25 trillion valuation. It is still chasing the remaining funds, and the maximum total it can gather will be around $20 billion.

In other words, while its valuation has gone up, investors willing to pay that price have not kept up.

In this market, the cheapest thing is valuation, and the most expensive thing is expectation. A $1.25 trillion valuation means OpenAI has to eventually become a company that generates hundreds of billions of dollars in profit at some point in the future. No one knows exactly when that point will arrive, but every investor who signed the check implicitly assumes that it will exist.

Right now it has $11 billion in hand. The remaining $19 billion will depend on whether the next batch of investors still buys into that story.