Sources told The Wall Street Journal this week that OpenAI is in talks to raise a new round of funding at a staggering valuation of more than $100 billion.
It turns out investors have already proven they're willing to value the company that highly to get on OpenAI's coveted cap table: In several companies tracking or facilitating secondary transactions (where investors buy shares from existing investors rather than directly from a company), investors have paid prices that suggest valuations of more than $100 billion.
The main deal that OpenAI is negotiating is being led by Josh Kushner's Thrive Capital, which the Journal reports will invest $1 billion. Microsoft, Nvidia, and Apple are also rumored to be investors. This would be a big step forward for the AI leader. The company most recently sold existing shares in September, valuing it at $86 billion, Bloomberg reported.
Still, brokerage Rainmaker Securities sees investors bidding for OpenAI shares, pricing the company at $143 billion. Secondary data tracking platform Capright estimates the company is currently worth more than $111 billion, based on both secondary activity and past traditional funding rounds.
“There are a lot of investors who want to be part of this story and invest in this company,” Glenn Anderson, co-founder and managing partner at Rainmaker Securities, told TechCrunch. “Is a $100 billion valuation a lot? Maybe. But if OpenAI lives up to expectations, [its] If there is potential, it could be a bargain.”
Greg Martin, co-founder and managing director at Rainmaker Securities, added that while the company's valuation has skyrocketed, so has its revenue. While OpenAI is reportedly still burning through a lot of money, he said it's notable that the company's revenue has grown from zero a few years ago to billions now. The company is on track to hit $2 billion in annual recurring revenue by the end of the year, according to The Information.
“OpenAI is obviously difficult to value fairly, but there is a lot of demand,” Martin said. “There is concern that people will miss out on the premium the company is getting. There is certainly a compelling argument that the company could be worth $1 trillion one day.”
While OpenAI's next official valuation has yet to be determined, one thing is certain: the latest funding round will spur more secondary investment activity around OpenAI and other AI competitors, Martin said. He also predicts the round will boost valuations for companies like Anthropic, Cohere and Hugging Face.
“It creates buzz, it creates excitement and it resets market expectations,” Martin said.