OpenAI Cuts Funding Target to About $20 Billion at $1.25 Trillion Valuation, FT Reports

OpenAI has cut the target for its latest funding round by $10 billion, to about $20 billion, and lowered its desired valuation to $1.25 trillion from $1.4 trillion, the Financial Times reported on Friday, according to Reuters.

OpenAI had set a Friday deadline for investors to commit to the round, but the first close is expected to raise less than $20 billion after some investors reduced their allocations, the report said.

Who is expected to take part

A consortium of investors from the United Arab Emirates that includes the state-backed technology fund MGX is expected to be the largest participant in the round, according to the report. As part of the deal, OpenAI would gain the option to lease newly developed computing capacity in the region.

Venture capital firms including Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to participate, the report said. Wealthy individuals will have the option to invest in a subsequent retail offering at the $1.25 trillion valuation, according to the Financial Times.

OpenAI, MGX, Coatue, Sequoia Capital and Andreessen Horowitz did not immediately respond to Reuters requests for comment outside regular business hours. Founders Fund could not be reached for comment, Reuters reported.

A selloff in tech shares

The cut comes during a selloff in technology stocks driven by worries over heavy spending on artificial intelligence. The Nasdaq index dropped 2.9% on Friday and is down 7.8% from its all-time closing high reached on October 6, Reuters reported.

OpenAI, which is pursuing a listing in 2027, has been keen to close the funding round partly to get ahead of Anthropic’s imminent listing, as the two companies are tapping a similar investor base, Reuters has reported.

Reporting based on coverage by Reuters and the Financial Times.