SoftBank’s $1.5 Billion Investment in OpenAI

As per recent developments, the SoftBank OpenAI investment has entered a new phase, with the creator of ChatGPT granting employees the option to sell shares worth $1.5 billion to the Japanese conglomerate. This move is set to help SoftBank expand into new industries while securing a larger stake in OpenAI.

According to CNBC, the CEO of Japanese company, Masayoshi Son has been keen on getting a larger stake in the AI startup after SoftBank invested $500 million in the last funding round of Open AI. By December 24, 2024, employees must decide whether they want to sell their shares, as set by the AI startup.

OpenAI and SoftBank Remain Tight-Lipped

Although neither of the parties have commented on the SoftBank investment in Open AI, a source close to the deal said that the tender offer is not related to OpenAI’s future restructuring as a for-profit organization.

A person close to the CEO told CNBC that the investment in OpenAI is in line with SoftBank’s strategy of investing capital-intensive businesses. In fact, Son said in a conference that he has saved ‘tens of billions of dollars to invest in the next big thing’ in Artificial Intelligence.

SoftBank’s Extensive AI Investments

The CEO has been investing in other private players in the AI space, like Apple, Qualcomm, and Alibaba. Additionally, SoftBank’s Vision Fund 2 has also invested in several booming AI startups, such as Glean, Perplexity, and Poolside.

Currently, SoftBank has a diverse portfolio of 470 companies, with assets valued at $160 billion across its two Vision Funds. These investments highlight the company’s interest in advancing AI technologies and maintaining a stronghold in the tech industry. This SoftBank AI investment strategy plays a crucial role in the efforts to grow its impact on the quickly growing AI sector.

OpenAI’s Valuation and Financial Landscape

OpenAI’s valuation has surged to $157 billion over the past two years, after the massive success of ChatGPT. The AI startup has raised $13 billion from Microsoft and an additional $6.6 billion in its October 2024 funding round, led by Thrive Capital with participation from Nvidia, SoftBank, and others.

Apart from these funding successes, OpenAI is already lining up for its next generation Orion AI model to be released by the end of 2024. The Open AI Orion model is expected to be much improved version than its present technologies.

Despite these successes, the AI startup expects a loss of $5 billion this year, against projected revenue of $3.7 billion. However, with a $4 billion loan Open AI’s liquidity has risen to $10 billion. With all of this OpenAI investment landscape is looking strong as it continues to attract interest from major investors like SoftBank.