OpenAI slashes funding target by $10 billion amid tech rout, FT reports

OpenAI has reduced the size of its latest funding target by $10 billion due to a downturn in tech stocks, according to the Financial Times. The AI company is now seeking $20 billion in funding, and its desired valuation has dropped to $1.25 trillion from $1.4 trillion. OpenAI originally set a Friday deadline for investors to commit to the round, but the initial closing is expected to raise less than $20 billion as some investors have lowered their allocations.

The UAE-based investment consortium, which includes MGX, is anticipated to be the largest participant in the funding round. In return for their investment, OpenAI would receive the option to lease newly developed computing capacity in the region. Venture capital firms such as Founders Fund, Coatue, Sequoia Capital, and Andreessen Horowitz are expected to participate in the round.

OpenAI, along with Anthropic CEOs, are set to appear before an Australian AI probe. Retail investors will have the opportunity to invest in a subsequent offering at a $1.25 trillion valuation. OpenAI, MGX, Coatue, Sequoia Capital, and Andreessen Horowitz have not yet responded to Reuters' requests for comment. Founders Fund was unavailable for comment.

US tech stocks have experienced a decline due to concerns over substantial AI investments, with the Nasdaq index falling 2.9% on Friday and down 7.8% from its all-time closing high in October. OpenAI, aiming for an IPO in 2027, has been motivated to close the funding round to stay ahead of Anthropic's upcoming listing, as they target a similar investor base.