OpenAI sealed down a desired $4 billion revolving line of credit, pushing the total liquidity of the company over the $10 billion mark. This is after it closed a funding round valued at an eye-watering $157 billion, raising $6.6 billion from a wide cross-section of investment firms and tech heavyweights.
The participants include major banks, such as JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, and HSBC. The credit line stands at a base of $4 billion, and it has the option to extend by another $2 billion to the credit facility. This will ensure three years of financial flexibility for OpenAI. The current number thus puts the interest rate to be set on the unsecured loan at SOFR + 100 basis points, which, in simple terms, translates to a very approximate borrowing cost of 6%.
In a series of deals closed Thursday, OpenAI said it has raised $1 billion in fresh liquidity. It comes just a few months after the company clocked a majority valuation of about $20 billion in August 2021 as it continues with its strategy of pushing the scale on its edge AI research and development, amplifying its products, infrastructure, and talent acquisition. “This gives us the elasticity to invest in new initiatives and operate with full agility as we scale,” the company said, underlining the deep strategic partnership with participating financial institutions, many of which are also customers.
Thrive Capital has committed $1 billion and other notable investors include Microsoft and Nvidia and also SoftBank and Khosla Ventures and Fidelity Management. OpenAI has grown extremely fast, especially since the rollout of ChatGPT late in 2022, which saw revenues leap by an astonishing 1,700% year on year. That is $300 million one month.
Despite this financial success, OpenAI carries heavy operational expenditure, particularly when the graphics processing units from Nvidia must be utilized for training its models. The company is expected to log some $5 billion in losses this year. According to reports, CFO Sarah Friar said that the company is discussing restructuring options to create a long-term growth model while other changes take place, including recent executive departures, for sustainable viability in the competitive arena of AI.
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