Where might OpenAI’s next $100 billion funding come from?

OpenAI is seeking to raise an unprecedented $100 billion in a new round of financing, a massive funding requirement that will test the financial resources and willingness of the world’s largest investment institutions. According to a report by The Information on Tuesday, this round of funding would bring the company’s pre-investment valuation to around $750 billion. In terms of funding sources, traditional American financial investors are expected to provide only a small portion, about $10 billion, since even large funds managing hundreds of billions of dollars in assets limit their exposure to any single company. Cash-rich tech giants such as Amazon are in talks for at least $10 billion of investment, a deal that may help OpenAI cover part of its planned $38 billion spending on AWS servers over the next few years. Sovereign wealth funds and major banks are seen as important potential funding sources. Abu Dhabi’s MGX fund and Saudi Arabia’s Public Investment Fund have both shown strong interest. Achieving a funding round of this scale will require an innovative mix of multiple sources. US Financial Institutions' Limited Participation Traditional US financial investors, including large retail fund management companies that support private startups, are expected to provide only a small portion of the total. Even institutions managing hundreds of billions in assets limit their exposure to any single company, with their total contribution expected to be about $10 billion. Large banks may offer more support. JPMorgan Chase, Goldman Sachs, and Morgan Stanley have all lent money to OpenAI and are also clients of the company. JPMorgan Chase recently said it is willing to provide equity investments of up to $10 billion per deal to companies working in key American technologies such as AI. These banks all hope to build strong relationships with a company that may go public in a major IPO in the next few years. Tech Giants Competing for Cloud Service Orders Cash-rich tech companies, especially those eager to win OpenAI’s cloud business, may take on a larger share of the investment. According to previous reports, Amazon is in talks to invest at least $10 billion in the company, which could help OpenAI pay part of its planned $38 billion spend on AWS servers over the next few years. Nvidia this year pledged to invest up to $100 billion in OpenAI to help the ChatGPT maker build its own data centers, though the deal has yet to be finalized. OpenAI may also ask this chipmaker to contribute to the new equity funding round, as Nvidia did last year. Microsoft has already invested more than $13 billion in OpenAI, holding a 27% stake, and may consider further investment to maintain its ownership level. Apple holds about $132.4 billion in cash and other liquid securities, and has reached an agreement with OpenAI to process some Siri assistant queries, though the future of the partnership remains uncertain. Sovereign Wealth Funds as Key Drivers Sovereign wealth funds are viewed as key funding sources. Abu Dhabi’s MGX fund, backed by the UAE government, may provide much of the capital for this funding round. MGX participated in OpenAI’s $6.6 billion round last October and was recently involved in a $6 billion tender offer for a $500 billion deal. MGX has both the willingness and capacity to participate on a large scale, though one issue is whether the fund will favor OpenAI or its rivals, Anthropic and xAI, which it also supports. Singapore’s GIC may also get involved, although it has already invested in Anthropic. Another major sovereign investor to watch is Saudi Arabia’s $925 billion Public Investment Fund’s AI project, Humain. Reportedly, the fund discussed joining a SoftBank-led round with OpenAI earlier this year. Humain may want OpenAI to build data centers in Saudi Arabia, as xAI is doing. SoftBank has invested in or committed over $32 billion to OpenAI, mainly from an earlier round this year. To invest more, SoftBank’s Masayoshi Son may need to sell shares in publicly listed companies, or hope that some private investment firms go public. Risk Warning and Disclaimer Markets have risks, investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial condition, or needs of any particular user. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular circumstances. Investments based on this article are at one’s own risk.