Quick Take
- The Financial Times reports OpenAI lowered its funding target to $20 billion, down from the $30 billion reported earlier, per TechCrunch.
- The Wall Street Journal reports OpenAI has $11 billion lined up so far and that some large investors were lukewarm.
- OpenAI has not commented. Everything here comes from press reports, not the company.
- This is a smaller raise than first reported, not a collapse.
A new report suggests that even OpenAI is hearing “maybe” from some of the biggest checkbooks.
How the target shrank
The reported terms changed across three reports in about five weeks.
In late September, Bloomberg reported OpenAI was in talks to raise at least $30 billion at about a $1.4 trillion valuation, per TechCrunch. The round was described as a bridge to an eventual IPO.
On October 22, CNBC reported the plan was up to $30 billion at a $1.25 trillion valuation before the new money, led by Coatue and investors in the UAE, according to TechCrunch.
Now the FT says the target is $20 billion, with the first close expected to come in below that, TechCrunch reports. A UAE investor group would lead. A later offering aimed at wealthy individuals could help fill the gap to $20 billion.
The WSJ added the sharper detail: $11 billion secured so far, and a “tepid” response from some big investors.
Why investors might be cooling
Timing is part of it. TechCrunch points out that Wall Street has grown nervous about heavy AI infrastructure spending.
That nervousness showed up in prices. On October 30, the Nasdaq fell 2.9% and chip stocks slid, TechCrunch reported. Alphabet, Amazon, Meta and Microsoft have laid out plans for more than $740 billion in capital spending this year, and investors are asking whether it will pay off.
Size matters too. OpenAI already raised $122 billion in March at an $852 billion valuation, per TechCrunch. The new round’s reported valuations, $1.4 trillion and then $1.25 trillion, were both above that March mark.
Fact, claim, judgment
Fact: OpenAI’s reported target fell from $30 billion to $20 billion across successive press reports, and the reported valuation fell from $1.4 trillion to $1.25 trillion.
Claim: that OpenAI has $11 billion secured and saw lukewarm interest. That is the WSJ’s reporting, based on sources. OpenAI has not confirmed it.
Judgment: this looks like price resistance, not a rush for the exits. Investors still seem willing to fund OpenAI. They are just less willing to do it at any price, in any amount, right now.
What it means for the rest of AI
If OpenAI has to work harder for money, smaller labs will too. Watch for more deals built on debt, cloud credits and chip partnerships instead of plain equity.
It also raises the stakes for the IPO plans of both OpenAI and Anthropic.
What to watch
Three things will tell us more. First, the final size of the first close. Second, whether the valuation slips again. Third, whether OpenAI confirms any of it.
Bandwagon Check
Fairly Hyped, not Overhyped. “The AI money hose is kinking” is a fair read of a real signal: the target dropped by a third and some big investors hesitated. But $11 billion in hand is still an enormous sum, and none of this is confirmed by OpenAI. Call it a kink, not a burst pipe.
Sources
- TechCrunch: OpenAI reportedly lowers funding target for new round
- TechCrunch: OpenAI reportedly in talks to raise $30B round at $1.4T valuation
- TechCrunch: OpenAI working on new $30B raise at $1.25T valuation ahead of IPO
- TechCrunch: Cracks are emerging in the AI spending boom
By Willa Ravenwire · The AI Bandwagon