Five weeks after introducing what has become the most popular AI chat bot in history, OpenAI, creator of ChatGPT, has emerged as tech’s hottest startup.
The San Francisco research lab is reportedly in talks to raise capital that would set OpenAI at a whopping valuation of nearly $30 billion at a time when the tech industry is reeling from a downturn.
OpenAI is in negotiations with investment firms including Peter Thiel’s Founders Fund for a tender offer of existing shares, according to the Financial Times. The deal would double OpenAI’s previous $14 billion valuation, and would make it one of the most valuable U.S. startups, according to the Wall Street Journal.
An OpenAI representative said the company had no comment.
ChatGPT, which became an instant hit when it launched in November, was downloaded by more than a million users within days of its release.
The groundbreaking, and controversial, AI technology uses sophisticated algorithms to simulate human conversations to interact with users. ChatGPT quickly drew rave reviews for being able to help users write letters, essays and poems, come up with recipes and suggestions for decor.
It can even compose quirky text like “a Biblical verse in the style of King James bible explaining how to remove a peanut butter sandwich from a VCR.”
“The adoption is skyrocketing,” Sergey Shykevich, a threat intelligence group manager at Check Point Software, told The Examiner. “It’s kind of a great thing.
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ChatGPT is seen as a significant step in the advancement of AI, which has steadily expanded with the introduction of consumer tools like Siri and Alexa and of systems that automate major segments of big corporations.
ChatGPT has been portrayed as a challenge to the dominance of Google and Facebook in the way people navigate the internet. “It’s almost a parallel universe to Google and Facebook,” Muddu Sudhakar, co-founder and CEO of Aisera, an AI software company geared to businesses. “It’s a threat to Google and Facebook.”
In fact, Microsoft is reportedly exploring integrating ChatGPT into its Bing search engine to make it more competitive with rival Google.
ChatGPT’s reported target valuation is significant given the recent pullback in VC tech investments as a result of the market downturn. After a surge of so-called unicorns, startups valued at $1 billion or more, last year saw a wave of startups with lower valuations. Many late-stage tech startups saw their valuation price pulled down to $680 million in the third quarter of 2022, according to PitchBook.
AI continued to be an attractive space for venture capital firms, but the economic downturn has clearly had an impact on valuations. Last month, Dataiku, an AI and analytics software company, announced that it had raised $200 million in a Series F round, at a $3.7 billion valuation, down from $4.6 billion in 2021.
Even a few startups that were once seen as headed to blockbuster IPOs were downgraded in terms of valuation. Stripe, the payments infrastructure company, saw its valuation slashed by 28% to $74 billion.
Launched in 2015, OpenAI was founded by a group of technologists and entrepreneurs, including CEO Sam Altman, Greg Brockman and Twitter CEO Elon Musk.
