OpenAI Nears Largest VC Fundraising Round of All Time at $6.5B

The artificial intelligence hype train continues to steam down the tracks, as Bloomberg reported that the largest venture capital fundraising round of all time—for none other than OpenAI—is on the verge of completion.

The $6.5 billion funding round values OpenAI at $150 billion, up from $86 billion in an earlier round, according to Bloomberg, which added that the current round is oversubscribed, meaning that potential investors were willing to pony up more than the $6.5 billion total.

Axios pointed out that this OpenAI funding round will top the previous high, which was set by another AI firm, xAI, led by Tesla CEO and X owner Elon Musk.

For context, the $6.5 billion matches the total amount raised by all startups in New York, Texas, and Florida combined in 2014, according to Axios, while the company’s $150 billion valuation equals the total under management by the entire U.S. venture capital market in 1999, during the internet bubble.

Who’s in?

Entry doesn’t come cheap, as The Information reported that the minimum investment to take part in the round is $250 million.

The investment round is being led by Thrive Capital, which chipped in $1.25 billion, according to Bloomberg, with other likely participants including Apple, Microsoft (OpenAI’s biggest backer), and Nvidia.

At least one previous OpenAI investor is out, as Bloomberg reported that Sequoia Capital is throwing its funding behind Safe Superintelligence, a startup founded by OpenAI co-founder Ilya Sutskever, who left OpenAI in May.

Media ups and downs

OpenAI has been in the news quite a bit this year, with much of it involving its relationships, good and bad, with media companies.

The startup reached deals with publishers to use their content to train its AI, including Le Monde and Prisa Media; Financial Times; Dotdash Meredith; Reddit; News Corp.; The Atlantic and Vox Media; Time; and Condé Nast.

And OpenAI reached a major partnership with Apple in June.

However, OpenAI was also hit with lawsuits over scraping content from publishers including The New York Times; the Center for Investigative Reporting; a group of newspapers including the Chicago Tribune, The Denver Post, The Mercury News (San Jose, Calif.); the New York Daily News, The Orange County Register (Calif.), the Orlando Sentinel (Fla.), the South Florida Sun Sentinel, and the Twin Cities Pioneer Press (St. Paul, Minn.); and AlterNet, The Intercept, and Raw Story.

What VCs are looking for

With generative AI continuing to make its mark on the investment sector, ADWEEK’s Trishla Ostwal spoke with five venture capitalists in the adtech sector last month, learning what the industry is looking for.

The ability to generate revenue was a key factor, with Sanja Partalo of S4S Ventures telling Ostwal, “They have to have some level of revenue,” and Progress Ventures’ Adriaan Zur Muhlen saying he prioritizes companies that have proven that they can generate at least $1 million.

While revenue is also considered by BDMI’s Sim Blaustein, he told Ostwal, “We also consider companies that are further out there—those that aren’t necessarily something that we know is going to work but are building something cool and with an exciting team behind them.”

As for potential red flags, Partalo said she is wary of companies pitching unrealistic forecasts and those with AI offerings that lack a deep understanding of existing workflows, particularly in creative environments, adding, “The idea that a generative AI company is going to create a still image or a video and that is the finished product … when I hear that kind of a pitch, it’s a turnoff.”