SoftBank Said to Put in $40 Billion and Overtake Microsoft as OpenAI's Biggest Investor

TMTPOST -- SoftBank Group Corp. may put in more than previously reported amount of money in the latest OpenAI’s funding round, overtaking Microsoft Corporation as the biggest investor.

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SoftBank is close to finalize a $40 billion primary investment in OpenAI at a $260 billion valuation, CNBC reported on Friday. The Japanese tech and telecoms giant is reported to pay out the funding over the coming 12 to 24 months, and its first payment up to $10 billion could come as soon as spring.

The funding would lift OpenAI’s post-money valuation to $300 billion, and made SoftBank replace Microsoft as the top backer of OpenAI. Microsoft began to invested in OpenAI in 2019 as the ChatGPT developer’s early investor and input a total of $13 billion as of September 30. OpenAI announced in October that it has raised $6.6 billion in new funding at a $157 billion post-money valuation. The funding round made OpenAI one of the top three most valued startups across the world, along with SpaceX and ByteDance. Microsoft was said to join in the funding with about $750 million.

OpenAI is in talk about raising up to $400 billion in a new funding round led by SoftBank, The Wall Street Journal cited people familiar with the matter on January 30. The round would value OpenAI up to $340 billion while the source said newer negotiations cut the valuation to as high as $300 billion, per the report.

CNBC the same day confirmed OpenAI is in discussion about up to $40 billion funding round at a valuation as much as $340 billion. The news media outlet also learned SoftBank, as the lead investor, will contribute between $15 billion and $25 billion.

The $300 billion was said to be a post-money valuation, namely, the value that includes the cash OpenAI raises in the round. If OpenAI successfully closes the reported new round, its valuation could more than double that in last October, when the company announced it had raised $6.6 billion in funding at $157 billion. That round made OpenAI one of the top three most valued startups across the world, along with SpaceX and ByteDance. The valuation is significantly higher than the $860 billion valuation from the company’s tender offer in February 2024.

OpenAI was reported to anticipate to use part of the funding for its money-losing business operations, and part of the cash would be used to help the ChatGPT-maker fulfill its around $18 billion commitment to Stargate, a joint venture founded by OpenAI, SoftBank and Oracle. The venture plans to invest $500 billion over the next four years building new artificial intelligence (A) infrastructure for OpenAI.

SoftBank and OpenAI are the lead partners for Stargate, with the former having financial responsibility and the later having operational responsibility, and Son will be the venture’s chairman, according to the statement. It said Arm Holdings Plc., Microsoft Coporation, Nvidia Corporation, Oracle, and OpenAI are the key initial technology partners.

Besides Stargate, OpenAI and SoftBank earlier this month announced partnership to form an AI venture in Japan, with an aim to develop and sell AI services to businesses across the country. It marks one of the most significant efforts to expand OpenAI’s enterprise customer base beyond the United States.

The venture, which will be housed under SoftBank’s telecom arm, plans to recruit 1,000 employees from SoftBank to market OpenAI’s products to industries ranging from automotive to retail. SoftBank Group companies, including key investees such as PayPay and LY, are expected to collectively spend $3 billion annually on OpenAI’s technology.