OpenAI slashes funding target by US$10 billion amid tech rout: FT

OpenAI has reduced its funding target by US$10 billion due to a decline in tech stocks fueled by AI concerns, according to the Financial Times. The company is now aiming for about US$20 billion in funding, and its desired valuation has fallen to US$1.25 trillion from the previously projected US$1.4 trillion. OpenAI required investors to commit by the end of the week (October 30), but the "first close" is anticipated to raise less than the US$20 billion target, with some investors trimming their contributions.

A consortium of investors from the United Arab Emirates, including the state-backed MGX, is anticipated to lead the round, with OpenAI gaining 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 also expected to participate.

Wealthy individuals will have the opportunity to invest in a later retail offering at the same valuation. OpenAI, MGX, Coatue, Sequoia Capital, and Andreessen Horowitz did not immediately respond to requests for comment. The tech industry has experienced a downturn due to growing apprehensions about substantial investment in AI.

The Nasdaq index declined by 2.9% on Friday, marking a 7.8% decrease from its peak reached on October 6. OpenAI, aiming for a 2027 listing, has been eager to finalize the funding round to stay ahead of Anthropic's upcoming listing, as both companies are targeting a similar investor base.