OpenAI has raised more than $6.5 billion in fresh capital from Thrive Capital and other investors in a round that valued the company at more than $150 billion valuation, cementing its place as one of the most funded AI startups in the world.
Speculation has simmered for weeks about the rumored round which just officially closed, Bloomberg News reported on Wednesday.
As a condition of the funding round, investors expect OpenAI to restructure as a for-profit public benefit corporation within two years, according to various reports.
Apple dropped out of the round late in the process after seemingly being interested early on, the WSJ reported.
SoftBank put down half a billion from its second Vision Fund, the Information reported, while Tiger Global Management, Coatue Management and Microsoft were also expected to join the round. Nvidia, Dragoneer Investment Group and United Arab Emirates-backed MGX were also in talks to potentially invest in the round.
It’s unclear why Apple pulled out but OpenAI has dealt with a string of high-profile departures this year, most recently with CTO Mira Murati and two others who resigned in September.
The company is also expected to take a $5 billion loss this year despite bringing in an estimated $3.7 billion in revenue, the NYT recently reported, and expects to reach $100 billion in revenue in 2029.
As the round’s lead investor, Thrive is being given the option of putting down another $1 billion at the same valuation through 2025, the NYT also reported, rankling other investors in the round.
AI startups have continued to scoop up funding over the past year since I first made a list of the top 10 generative AI startups in the Bay Area.
The “godmother of AI,” Stanford researcher Fei-Fei Li, raised $100 million at a $1 billion for her own AI startup called World Labs, the Financial Times reported in July.
Across the world, China-based Moonshot AI raised $1 billion earlier this year, Crunchbase reported. And in France, Holistic AI (often referred to as just “H”) raised $220 million in seed funding that included $120 million in convertible debt, Bloomberg News reported.
The AI boom cycle continues but, as always, there will be winners and losers that shake out. Down rounds are increasing for some AI startups, Business Insider recently reported.
For this list, we’ve selected venture capital backed startups based in the Bay Area that are developing foundational models, generative AI software, and AI semiconductors and related technology as their core products.
OpenAI (San Francisco)
Total Funding: More than $20 billion
Founded in 2015 with $1 billion-worth of grant commitments from Amazon Web Services, Elon Musk, Sam Altman, Peter Thiel, Reid Hoffman, Jessica Livingston, Y Combinator and Infosys. It’s unclear if that full amount ever materialized. Musk reneged on his own $1 billion commitment to OpenAI after donating $100 million, according to Semafor. Most of OpenAI’s funding comes from Microsoft which invested $1 billion in 2019 and then at least $2 billion more at some point before making a $10 billion multi-year commitment to OpenAI in 2023, according to the New York Times. OpenAI is now valued at more than $150 billion.
Anthropic (San Francisco)
Total Funding: $8.75 billion
Amazon has poured $4 billion into Anthropic, AP reported. Google has committed $2 billion, the WSJ reported. South Korean corporation SK Telecom invested $100 million. The company was valued at more than $19 billion earlier this year and is reportedly seeking a fresh funding round that could double its valuation.
xAI (Burlingame)
Total Funding: $6 billion
Elon Musk raised $6 billion in a series B round for his OpenAI competitor, xAI. The round valued xAI at $24 billion and was backed by investors including Andreessen Horowitz and Sequoia Capital, Reuters reported. The company has offices in Palo Alto, San Francisco and London, though business registration documents in California show the company is based in Burlingame and Austin, Texas.
Databricks (San Francisco)
Total Funding: $4.2 billion
The decade-plus old enterprise data analytics startup launched Dolly, its own large language model, in 2023 to compete with OpenAI’s software. Databricks is one of several Bay Area companies on our IPO watch list, as well.
Inflection AI (Palo Alto)
Total Funding:$1.6 billion
Inflection AI announced a $1.3 billion round last year that included Microsoft, Reid Hoffman, Bill Gates, Eric Schmidt and Nvidia — however, the company didn’t disclose how much of the round was cash versus cloud credits. Inflection was co-founded by former LinkedIn CEO Reid Hoffman. The company is reportedly valued $4 billion. Its other investors include Hoffman’s firm Greylock Partners, Polaris Partners and General Partnership.
Scale AI (San Francisco)
Total Funding: $1.6 billion
Scale AI landed $1 billion in a new round earlier this year which valued the company at $14 billion, nearly doubling its previous valuation from a $325 million Series E round in 2021. Its investors include Amazon, AMD Ventures, Cisco, Intel, Meta, Nvidia, Qualcomm, OpenAI, Founders Fund, Index Ventures, Tiger Global Management, Y Combinator, Spark Capital and Coatue Management.
Groq (Mountain View)
Total Funding: $1.1 billion
Groq raised $640 million in a Series D round led by BlackRock, Cisco Investments and Samsung Catalyst Fund that valued the company at nearly $3 billion, Reuters reported. The company is developing AI chips. Not to be confused with xAI’s “anti-woke” chatbot Grok.
SambaNova Systems (Palo Alto)
Total Funding: $1.1 billion
Founded by Stanford professors and former Oracle employees, SambaNova is designing AI chips and software. The company raised $676 million in a Series D round led by SoftBank’s Vision Fund 2 in 2021. And the company was a Bay Area Inno Award honoree in 2024.
Magic AI (San Francisco)
Total funding: $465 million
Magic raised $320 million in fresh funding in August from a suite of investors including Eric Schmidt, Nat Friedman, Daniel Gross, Elad Gil, Jane Street, Sequoia, Atlassian and CapitalG. The company announced a $117 million Series B round just six months earlier. The company is developing a generative AI coding tools for developers.
Adept AI (San Francisco)
Total Funding: $414/415 million
Founded and run by former Googlers, Adept raised $350 million round in a Series D round last year that was led by General Catalyst and Spark Capital, and valued the company at $1 billion.
Perplexity (San Francisco)
Total Funding: $414 million
Perplexity closed $250 million in a fresh round this year, the Financial Times reported in August. That funding came on the heels of a $75 million Series B round the company announced in January, which was also followed by another $63 million in April.
Glean Technologies (Palo Alto)
Total Funding: $356 million
Glean is reportedly trying to raise $250 million in fresh funding at a $4.5 billion valuation, the WSJ reported in August. That would bring Glean’s total funding to more $600 million. The startup is developing AI-powered enterprise search software.
Weights & Biases (San Francisco)
Total Funding: $265 million
A Bay Area Inno Awards honoree, Weights & Biases is AI observability software for developers. It raised a “strategic” investment round in 2023 that was led by former Github CEO Nat Friedman and Daniel Gross. That round grew to $65 million and pushed its valuation up to $1.25 billion.
Anyscale (San Francisco)
Total Funding: $260 million
Founded by UC Berkeley researchers, Anyscale raised nearly $200 million round in a Series C round that closed in 2022 and was split between equity and debt. The round valued the company at over $1 billion. Its investors include Andreessen Horowitz, Ant Group, Foundation Capital, Intel Capital, New Enterprise Associates and the House Fund.
