OpenAI has completed a deal that values the San Francisco artificial intelligence company at more than $80 billion, nearly tripling its valuation in less than 10 months, according to three people familiar with the deal. .
The company plans to sell its existing shares in a so-called tender offer led by venture firm Thrive Capital, according to people familiar with the matter. The agreement allows employees to convert their company stock into cash rather than traditional financing rounds to raise money for business operations.
OpenAI, which declined to comment, is now one of the world's most valuable technology startups after ByteDance and SpaceX, according to figures from data tracker CB Insights.
The deal is another example of how Silicon Valley's deal-making machine is funneling money into a handful of companies that specialize in generative AI (technologies that can generate text, audio, and images on their own). The funding boom began early last year after OpenAI captured the public's imagination with the release of its online chatbot ChatGPT.
(The New York Times sued OpenAI and its partner Microsoft in December, alleging copyright infringement of news content related to its AI systems.)
The deal comes at a critical time for OpenAI and marks a significant vote of confidence for the company after a year of controversy. The company's board fired CEO Sam Altman in November after losing confidence in his leadership. The firings sparked a week of turmoil and cast doubt on the company's future, as employees threatened to resign in solidarity with Mr. Altman. Eventually, he was reinstated and several directors resigned.
In an effort to resolve last year's turmoil, OpenAI hired law firm WilmerHale to review the board's actions and Mr. Altman's leadership. WilmerHale plans to finish reporting on the episode early this year.
The company agreed to a similar deal early last year. Venture capital firms Thrive Capital, Sequoia Capital, Andreessen Horowitz, and K2 Global have agreed to buy OpenAI stock in a tender offer that values the company at about $29 billion.
Investors want to pour money into AI companies. Last January, Microsoft invested $10 billion in OpenAI, bringing its total investment in the San Francisco startup to $13 billion.
Thrive did not respond to a request for comment.
Since then, OpenAI rival Anthropic has raised $6 billion from Google and Amazon. Cohere, a startup founded by former Google researchers, has raised $270 million, bringing its total funding to more than $440 million. Inflection AI, founded by a former Google executive, also raised $1.3 billion, bringing its total to $1.5 billion. .
OpenAI appeared to be close to closing on its latest deal in November, when Altman was abruptly fired. The following week, the possibility of a deal loomed over Mr. Altman's efforts to negotiate his return to the company. Before he was reinstated, more than 700 of the company's 770 employees signed a petition calling for his reinstatement.