ChatGPT's developer OpenAI in talks with investors that would make it worth $29 billion

San Francisco-based artificial intelligence (AI) company OpenAI is reportedly in discussions to raise capital at a valuation of almost $30bn, according to a report from The Wall Street Journal. Investment groups, including Peter Thiel's Founders Fund, are said to be considering a tender offer of existing shares, which would allow investors to purchase OpenAI shares from current shareholders, including employees. The move would mark a significant surge in the company's valuation from around $20bn in 2021, when it was valued during a secondary share sale.

The increased interest in OpenAI comes as the company released its newest form of GPT-3.5 software, a chatbot that can converse with users through text and images. The software quickly gained viral attention and surpassed 1 million users within just five days of its release. The talks also come as technology companies face cuts to their values and investors pull back from new deals. In the final three months of 2022, the value of venture capital acquisition deals fell to $763m, the lowest it has been in over a decade, according to PitchBook data cited in a Financial Times report.

When was OpenAI founded?

OpenAI was founded in 2015 by a group of tech heavyweights, including Elon Musk, Sam Altman, and Thiel, with the goal of developing "safe" AI. The company has received backing from investors including Sequoia Capital, Tiger Global Management, and Andreessen Horowitz. In 2019, Microsoft invested $1bn in OpenAI as part of an agreement to jointly develop new computing technologies. Musk stepped down from OpenAI's board in 2018 to avoid any conflict of interest with his electric car company's own work on AI. After the release of ChatGPT, he tweeted: "ChatGPT is scary good. We are not far from dangerously strong AI."

Venture capital investment in generative AI, which is capable of producing original content, has seen significant growth in recent years. PitchBook data shows that investment in this type of AI increased 425% between 2020 and 2022, reaching a total of $2.1bn. If the reported talks are successful, the deal would make OpenAI an outlier in Silicon Valley, as many technology companies have had to implement aggressive cost-cutting measures in response to the stock market rout and funding crunch of recent months. Founders Fund declined to comment on the reports, and OpenAI did not respond to a request for comment. It is worth noting that the discussions around a potential OpenAI tender offer are ongoing and the value of the deal has not been finalized.