A few weeks back, there were reports that Apple was exploring to invest in the ChatGPT developer OpenAI. However, it looks like Apple has backed out of this decision. Now, the Japanese telecom giant SoftBank has reportedly agreed to invest $500 million in the AI giant, through its Vision Fund.
SoftBank to back OpenAI
As per a report by The Information, this investment is said to be part of a larger funding round that OpenAI is negotiating, which could total $6.5 billion at a valuation of $150 billion.
SoftBank’s support for OpenAI would reunite Sam Altman and Masayoshi Son, who had earlier considered starting an AI chip business to compete with Nvidia, though nothing has turned fruitful.
SoftBank owns two British AI chip companies: Arm Holdings, which it tried but failed to sell to Nvidia, and Graphcore, which it bought in July.
More investment on cards
The upcoming funding round is likely to be led by Thrive Capital, with participation from Microsoft, OpenAI’s biggest investor, and others. Microsoft, which has previously invested nearly $13 billion in OpenAI, is likely to add another $1 billion.
This round occurs amidst a period of uncertainty for the company, highlighted by leadership changes such as the planned exit of CTO Mira Murati.
Investment plans
A portion of the funds will be used to compute infrastructure, as mentioned by OpenAI’s Chief Financial Officer, Sarah Friar, in a leaked internal memo. Earlier this year, it was reported that OpenAI is working with Microsoft to build an AI supercomputer in the cloud using millions of chips, which would support OpenAI’s growing computational demands.
Besides the investment, OpenAI is also reportedly seeking a $5 billion revolving credit facility from banks.
Launch of next-gen model Strawberry
The high valuation suggests strong investor confidence in OpenAI’s upcoming large language model, reportedly called Strawberry. Set to launch soon, it is expected to have more advanced reasoning capabilities than GPT-4o, with improvements in tasks like solving complex math problems and generating code.
However, Strawberry’s slower response time and higher hardware resource requirements could drive up OpenAI’s operating costs.
It is believed that the new investment will be used to cover up these costs as the company develops further models in the future.
The post SoftBank Vision Fund to invest $500M in OpenAI at $150B valuation appeared first on Tech Funding News.