Microsoft Corp in talks to invest $10 Bn in OpenAI
- ByStartupStory | January 10, 2023
Microsoft Corp is in talks to invest $10 billion in OpenAI, the owner of ChatGPT, valuing the San Francisco-based company at $29 billion, according to Semafor, citing people familiar with the matter.
Other venture firms have contributed to the funding, and deal documents have been distributed to prospective investors in recent weeks, with the goal of closing the round by the end of 2022, according to the report.
This comes after the Wall Street Journal reported that OpenAI was in talks to sell existing shares at a valuation of around $29 billion, with venture capital firms such as Thrive Capital and Founders Fund buying shares from existing shareholders.
According to the Semafor report, the funding terms include Microsoft receiving 75% of OpenAI’s profits until it recoups its initial investment after OpenAI figures out how to make money on ChatGPT and other products such as image creation tool Dall-E.
When Microsoft reaches that threshold, it will own 49% of OpenAI, with other investors owning 49% and OpenAI’s nonprofit parent owning 2%, according to the report, which does not specify what the stakes will be until Microsoft receives its money back.
OpenAI, Founded by Elon Musk and investor Sam Altman, made the chatGPT chatbot available for free public testion of November 30. A chatbot is a software application that uses user input to simulate human-like conversation.
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