OpenAI cuts latest funding target by $10 billion amid tech rout, FT reports

OpenAI has slashed the target for its latest funding round by $10 billion amid a selloff in tech stocks driven by AI worries, the Financial Times reported on Friday, citing people with knowledge of the matter. The ChatGPT maker is now seeking about $20 billion, and its desired valuation has dropped to $1.25 trillion from $1.4 trillion, the report said. OpenAI set a Friday deadline for investors to commit, but the "first close" is expected to raise less than $20 billion after some investors reduced their allocations.

Funding round participants

A consortium of UAE investors that includes state-backed technology fund MGX is expected to be the largest participant in the round. As part of the deal, OpenAI would gain the option to lease newly developed computing capacity in the region, the newspaper added. Venture capital firms including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to participate, according to the report. Wealthy individuals will have the option to invest in a subsequent retail offering at a $1.25 trillion valuation, the FT added.

Company responses and market backdrop

OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to Reuters requests for comment outside regular business hours. Founders Fund could not be reached for comment. US tech stocks have suffered a rout amid growing worries over massive spending on AI. The tech-heavy Nasdaq index dropped 2.9% on Friday and is down 7.8% from its all-time closing high reached on October 6.

IPO plans and Anthropic

OpenAI, which is pursuing a listing in 2027, has been keen to close the funding round partly to get ahead of Anthropic's imminent listing as the two are tapping a similar investor base, Reuters has reported.

Earlier coverage: OpenAI Seeks Up to $30 Billion at $1.25 Trillion Valuation Ahead of IPO

Sources: Reuters · Financial Times · Wall Street Journal