OpenAI Cuts Funding Target to $20 Billion From $30 Billion, Reports Say

What happened

On October 30, Reuters reported that the Financial Times, citing people with knowledge of the matter, said OpenAI has cut its latest funding target by $10 billion and is now seeking to raise $20 billion at a $1.25 trillion valuation. Reuters had previously reported that OpenAI was aiming to raise $30 billion at a $1.4 trillion valuation.

OpenAI had set Friday, October 30, as the deadline for investors to commit to the round, according to reports, but the first close is expected to raise less than $20 billion after some investors reduced their allocations. Reuters said OpenAI did not immediately respond to a request for comment outside regular business hours.

The valuation cut came before the target cut. Yahoo Finance reported on October 23 that OpenAI had lowered the price it was seeking from new investors to $1.25 trillion from $1.4 trillion on October 22, a $150 billion reduction, with resistance from some investors reported but no reason given for the lower price. The round had earlier been described as a bridge ahead of a possible initial public offering, with UAE funds and Coatue named as prospective leaders and BlackRock among the institutions previously in talks.

Reuters also noted the market backdrop on October 30: US tech stocks fell, with the Nasdaq index down 2.9% on the day and 7.8% below its all-time closing high of October 6, amid worries over massive spending on AI. Reuters had earlier reported that OpenAI was pushing to close the round partly to get ahead of Anthropic, whose public market debut is expected in mid-November, as the two labs tap a similar investor base.

Key facts

1. New target: $20 billion raised at a $1.25 trillion valuation
2. Previous target: $30 billion raised at a $1.4 trillion valuation
3. Size of the cuts: Funding target down $10 billion; valuation target down $150 billion
4. Deadline and first close: Investor commitments were due Friday, October 30; the first close is reportedly set to come in below $20 billion, with some investors cutting allocations
5. Valuation timeline: The asking valuation was already cut to $1.25 trillion from $1.4 trillion on October 22
6. Company response: OpenAI did not immediately respond to a request for comment, according to reports
7. Round context: Previously described as a bridge ahead of a possible IPO; Reuters earlier reported the push was partly to secure investors ahead of Anthropic's debut