OpenAI is raising funds again: with a valuation of $1.2 trillion, who dares to take the baton?

OpenAI is in initial contact with investors for a new round of private funding, with a potential valuation of over $1.2 trillion. Given that it has already raised over $180 billion and existing major shareholders are generally facing capital expenditure pressures, the biggest question is who will provide the backing for this round of financing.

According to The Information this week, OpenAI is currently in early talks with investors for a new round of private funding, in which the company's valuation could reach $1.2 trillion or higher.

Just before the news of this round of financing broke, OpenAI CEO Sam Altman publicly stated that the company would not be going public this year.

By remaining private, OpenAI can buy more time to boost sales while avoiding disclosing its high growth costs to the public market, such as the significant margin-squeezing discounts it offers to wrest business from competitor Anthropic.

However, the core challenge facing this round of financing is: who can act as a ballast for this massive deal? OpenAI has raised or committed a total of $182 billion, far exceeding Anthropic's $130 billion, setting a record for private company financing. But its major existing investors are all facing capital pressures, limiting their ability to make further large investments.

Why choose to stay in the private equity market?

Sam Altman recently stated explicitly that an IPO will not occur this year. For OpenAI, maintaining its private status provides a crucial buffer: it avoids disclosing the costs behind its growth to public shareholders.

According to The Information, OpenAI is currently trading price cuts for growth. This strategy helps expand its user base but doesn't significantly improve actual cash recovery. Its annualized revenue growth in July exceeded $40 billion, but it still lags behind Anthropic's $65 billion.

Meanwhile, OpenAI previously predicted that the server rental costs required for AI model training alone would accumulate to approximately $170 billion by 2028.

If this round of financing values the company at $1.2 trillion, and its IPO valuation reaches $1.5 trillion, this figure is close to external predictions for Anthropic's IPO valuation, meaning early entrants will receive a paper return of approximately 25%.

The existing major shareholders each have their own troubles.

In its past funding rounds, OpenAI has included almost all of the major institutional investors in the market on its shareholder list.

The $122 billion funding round announced in March of this year involved nearly 30 participants, including asset management giants such as T. Rowe Price, Fidelity, and BlackRock, cross-industry funds such as Coatue Management, D1 Capital Partners, and Dragoneer Investment Group, and top Silicon Valley venture capital firms such as Andreessen Horowitz and Sequoia Capital.

However, very few of these institutions truly possess the capability to invest hundreds of billions of dollars. Furthermore, the largest shareholders currently face their own capital pressures.

SoftBank has applied for a loan of nearly $12 billion to deliver the final $10 billion investment it has committed to in OpenAI.Amazon projected in July that its capital expenditures would reach $200 billion, which is likely to far exceed its operating cash flow.Nvidia is providing up to $105 billion in credit support for OpenAI’s large data center in Ohio, which is already a heavy off-balance-sheet burden.

If the aforementioned companies were to significantly increase their stake in OpenAI, it would inevitably raise concerns among their respective creditors and shareholders.

Can the supplier become the new acquirer?

With existing major shareholders facing restrictions, OpenAI's chip and computing power suppliers have become a potential source of funding attracting attention. The logic is that if OpenAI's business continues to grow, these suppliers will be direct beneficiaries, and investing in them to form a deep partnership has strategic value.

Among them, Broadcom is collaborating with OpenAI to develop custom chips and held approximately $24 billion in cash and cash equivalents as of August this year, making it one of the few potential buyers that still has room to maneuver.

However, whether OpenAI's revenue can truly accelerate remains the biggest unknown. Although the company recently launched the Codex programming product and released new models such as 5.6 and Astra, the simultaneous price reduction has cast a shadow over its revenue prospects.

What's drawing even more attention from the market is that some researchers within OpenAI have publicly called for slowing down model development to allow safety practices to catch up. This internal disagreement undoubtedly adds more uncertainty to the company's next steps.

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