The creator of ChatGPT, OpenAI, announced on Thursday that it had obtained a new $4 billion revolving credit line. A day earlier, the company had concluded a $6.6 billion investment round, solidifying its status as one of the world’s most valuable private enterprises.
TakeAway Points:
- OpenAI has secured a new $4 billion revolving credit line, the ChatGPT maker said on Thursday, a day after it closed a $6.6 billion funding round that cemented its position as one of the most valuable private companies in the world.
- The startup on Wednesday raised new funds at a valuation of nearly $157 billion from returning venture capital investors, including Thrive Capital and Khosla Ventures.
- Meanwhile, Texas filed a lawsuit against TikTok on Thursday, claiming that the social media company had shared children’s personally identifiable information without getting permission from their parents or legal guardians, in violation of both state law and children’s right to privacy.
OpenAI’s $4 billion credit line
A day after closing a $6.6 billion investment round that solidified its status as one of the most valuable private companies in the world, OpenAI, the company behind ChatGPT, announced on Thursday that it had received a fresh $4 billion revolving credit line.
The borrowing facility will boost its liquidity to $10 billion, OpenAI said, allowing the startup to buy costly computing capacity, including Nvidia chips, in its race with tech giants such as Alphabet-owned Google.
“This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities,” OpenAI’s finance chief Sarah Friar said.
The credit line is with JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC.
OpenAI fundraising
The startup at the heart of the generative AI boom on Wednesday raised new funds at a valuation of nearly $157 billion from returning venture capital investors, including Thrive Capital and Khosla Ventures.
Its biggest corporate backer, Microsoft, and new investor, Nvidia, also joined the funding that came in the form of convertible notes.
The conversion to equity hinges on a successful structural change into a for-profit company and the removal of the cap on returns for investors.
The latest funding coincided with executive changes, including the abrupt departure of long-time Chief Technology Officer, Mira Murati, last week.
The personnel changes have not dampened the enthusiasm of most investors, who expect significant growth based on the projections by CEO Sam Altman.
The company is on pace to generate $3.6 billion in revenue this year even as losses surge to more than $5 billion. It expects a major revenue jump next year to $11.6 billion, according to sources familiar with the figures.
OpenAI is also offering Thrive Capital a sweetener no other investors are getting: the potential to invest another $1 billion next year at the same valuation if the AI firm hits a revenue goal, as reported last month.
Texas sues TikTok for violating children’s privacy
Texas sued TikTok on Thursday, accusing the social media platform of violating children’s privacy and state law by sharing children’s personal identifying information without consent from their parents or legal guardians.
The lawsuit filed by Texas Attorney General Ken Paxton seeks an injunction and civil penalties of up to $10,000 for each violation of the state’s Securing Children Online through Parental Empowerment Act, or SCOPE Act.
Paxton said TikTok, whose parent is China’s ByteDance, does not provide tools to restrict children’s privacy and account settings, even allowing information to be shared from accounts set to “private,” and allows targeted advertising to children.
TikTok and other large technology companies must be held accountable “for exploiting Texas children and failing to prioritize minors’ online safety and privacy,” Paxton said in a statement.
The attorney general filed the lawsuit in a Galveston County, Texas state court.
