Microsoft is weighing a $10 billion investment in OpenAI, sources say

Microsoft is planning to invest up to $10 billion into the artificial intelligence startup OpenAI, according to sources familiar with the matter.

OpenAI, the startup behind the viral chatbot ChatGPT that has helped create a fervor among investors for companies working on so-called generative A.I., has been in talks to raise additional capital from Microsoft, which had previously invested $1 billion in the startup in 2019 and could use the technology to supercharge a variety of its software products. It is unclear whether the $10 billion would be fully in cash or whether that figure includes the value of services Microsoft will provide as part of its partnership with OpenAI.

Microsoft’s potential investment is separate from efforts underway by a group of venture capitalists to scoop up shares from OpenAI employees and other insiders in a secondary market transaction that could value the company at around $29 billion. The Wall Street Journal first reported the valuation figure of the tender offer, and it was independently verified by Fortune. Terms are not finalized and could still change for both the Microsoft investment and the tender offer. 

Under the terms of the deal, Microsoft would be entitled to 75% of OpenAI’s profits until it earns back its initial investment, according to Semafor, which first reported the figure of the planned investment. After that threshold is reached, Microsoft would have a 49% stake in OpenAI with other investors taking another 49%, and OpenAI’s nonprofit parent getting 2%, the publication reported, without saying what stake Microsoft controls until that point.

Mira Murati, OpenAI’s chief technology officer, in an interview with Fortune, declined to comment on Microsoft’s possible investment into OpenAI or on other fundraising efforts. A Microsoft spokesperson also declined to comment.

OpenAI has emerged as the standard-bearer for generative A.I. technology, a powerful new class of tools that some have likened in significance to the…

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