OpenAI announced on Monday that it has finalized a significant funding round totaling $40 billion, effectively doubling its valuation in just six months. This new investment initiative, spearheaded by the Japanese conglomerate SoftBank, now places OpenAI at a valuation of $300 billion, ranking it among the most valuable private enterprises globally, alongside notable companies like SpaceX and ByteDance, the parent company of TikTok.

Growth in User Engagement

As per the latest updates, OpenAI reported that its widely used chatbot, ChatGPT, boasts 500 million active users on a weekly basis, a marked increase from 400 million users in late February. Notably, around 20 million users are subscribed to the advanced versions of the chatbot, emphasizing the strong demand for OpenAI’s offerings.

Structure of the Funding Deal

The funding will be executed in two phases. An immediate injection of $10 billion is anticipated, followed by an additional $30 billion expected by year-end. SoftBank Group contributes 75% of the total, with the remainder coming from a diverse group of investors, including Microsoft, Thrive Capital, Coatue, and Altimeter. Microsoft and Thrive Capital have played pivotal roles in previous funding rounds as well.

Evolution from Nonprofit to For-Profit

Founded in 2015 by Sam Altman, Elon Musk, and others as a nonprofit, OpenAI transitioned to a for-profit model in 2018, allowing it to attract necessary capital for developing advanced artificial intelligence technologies. Despite this shift, the nonprofit arm retains operational control. Recently, Altman has been exploring a transition towards a public benefit corporation (P.B.C.) aimed at balancing commercial interests with social good.

Legal and Strategic Challenges

The path forward is complicated by legal disputes; notably, Elon Musk has filed a lawsuit against OpenAI and Altman, contending that their actions compromise the founding mission by prioritizing commercial pursuits over public welfare. Furthermore, Musk’s consortium made a controversial bid exceeding $97 billion for the nonprofit assets controlling OpenAI, which was turned down by the board.

If the planned transition to a P.B.C. is not achieved by the end of the year, SoftBank has reserved the right to diminish its commitment to $20 billion, adding further pressure to expedite this change.