According to media reports, Microsoft Corp is in talks to invest $10 billion in OpenAI, the owner of ChatGPT, valuing the San Francisco-based company at $29 billion.
Other venture firms have contributed to the funding, and deal documents have been distributed to prospective investors in recent weeks, with the goal of closing the round by the end of 2022, according to the report.
This comes after the Wall Street Journal reported that OpenAI was in talks to sell existing shares at a valuation of around $29 billion, with venture capital firms such as Thrive Capital and Founders Fund purchasing shares from existing shareholders.
On November 30, OpenAI, founded by Tesla Inc CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing. A chatbot is a software application that uses user input to simulate human-like conversation.
According to the report, the funding terms include Microsoft receiving 75 per cent of OpenAI’s profits until it recoups its initial investment after OpenAI figures out how to make money on ChatGPT and other products such as image creation tool Dall-E.
When Microsoft reaches that threshold, it will own 49 per cent of OpenAI, with other investors owning 49 per cent and OpenAI’s nonprofit parent owning 2 per cent, according to the report, which does not specify what the stakes will be until Microsoft receives its money back. Microsoft, which invested $1 billion in OpenAI in 2019, was working on launching a version of its search engine Bing that would use the AI behind ChatGPT.
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