By Krystal Hu and Kenrick Cai

September 27, 20245:13 PM

OpenAI logo is seen near computer motherboard in this illustration taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights, opens new tab

Sept 27 (Reuters) - Thrive Capital is investing more than $1 billion of OpenAI's current $6.5 billion fundraising round, and it has 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, people familiar with the matter said on Friday.

OpenAI is predicting its revenue will skyrocket to $11.6 billion next year from an estimated $3.7 billion in 2024, the sources said, speaking on condition of anonymity. Losses are expected to be as much as $5 billion this year, depending largely on their spending for computing power that could change, one of the sources added.

The current funding round, which comes in the form of convertible debt, is expected to close by the end of next week and could value OpenAI at $150 billion, cementing its status as one of the most valuable private companies in the world.

That valuation depends on pulling off a complicated restructuring to remove the control of its non-profit board and also remove cap on investment return to investors, a plan first reported by Reuters. There is no specific timeline when the conversion could be completed.

Thrive Capital, which also led OpenAI's previous funding round, is offering $1.2 billion from a combination of its own fund and a special purpose vehicle for smaller investors. Other investors on the new round include Microsoft (MSFT.O), opens new tab, Apple (AAPL.O), opens new tab, Nvidia (NVDA.O), opens new tab and Khosla Ventures.

The others were not given the option for future investment at current price, sources said. OpenAI's valuation has soared quickly, and if it continues to do so, Thrive could find itself increasing its stake next year at a discounted price.

Reuters was not able to determine the revenue target associated with the option for Thrive, which was founded by Joshua Kushner.

Thrive and OpenAI declined to comment.

OpenAI's revenue expectations far exceed CEO Sam Altman's earlier projection of $1 billion in revenue this year. The main revenue sources are sales of its services to corporations and subscriptions to its chatbot.

Its flagship product, ChatGPT, is expected to bring in $2.7 billion in revenue this year, jumping from $700 million in 2023. The chatbot service, which charges a $20 fee every month, has about 10 million paying users.

The financials and details about Thrive's additional option were first reported by the New York Times on Friday.

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Reporting by Krystal Hu and Kenrick Cai in San Fransico; Editing by Will Dunham

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Krystal Hu

Thomson Reuters

Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.

Kenrick Cai

Thomson Reuters

Kenrick Cai is a correspondent for Reuters based in San Francisco. He covers Google, its parent company Alphabet and artificial intelligence. Cai joined Reuters in 2024. He previously worked at Forbes magazine, where he was a staff writer covering venture capital and startups. He received a Best in Business award from the Society for Advancing Business Editing and Writing in 2023. He is a graduate of Duke University.