OpenAI has reportedly lowered the target of its latest funding round to $20 billion, down from the $30 billion that was previously reported, according to the Financial Times as relayed by TechCrunch on Friday, October 31. These are media reports; OpenAI has not confirmed the figures, and TechCrunch says it has asked the company for comment. The Wall Street Journal reported that OpenAI has secured $11 billion so far and that some large investors have responded “tepidly.”
What has been reported
Over the past weeks, reports put OpenAI’s raise at $30 billion at a $1.4 trillion valuation, then at a $1.25 trillion valuation, ahead of a planned IPO. We covered the second version in our report on the $30 billion raise at a $1.25 trillion valuation, which was itself based on media sources and flagged as unconfirmed.
The new details, as summarized by TechCrunch:
- The Financial Times says the target is now $20 billion, and that the first close is expected to be even lower than that.
- A group of investors from the United Arab Emirates is expected to lead the round.
- A later retail offering for wealthy individuals could bring the total to the $20 billion target.
- The Wall Street Journal adds that $11 billion has been secured and that the response from some large investors has been described as tepid.
The reports do not state the valuation attached to the smaller round, so we do not repeat the earlier valuation figures as current.
Why the timing matters
TechCrunch ties the difficulty partly to bad timing. Wall Street has become wary of heavy AI infrastructure spending, and tech stocks have sold off. Our coverage this week shows the pattern: Intel fell 28% after a weak outlook linked to AI-driven memory costs, and Alphabet had its worst day on record after its quarterly report. A TechCrunch analysis called “Cracks are emerging in the AI spending boom” notes that companies have promised to spend more than $740 billion this year on capital expenditures.
OpenAI’s fundraising also does not happen in isolation from its rival. TechCrunch notes that Anthropic’s planned IPO could be facing challenges too, and the Financial Times separately reported that Anthropic is expected to receive a high-yield credit rating after listing, as we described in our report on that rating.
What a smaller round does and does not mean
A lower target is not evidence that OpenAI is short of cash, and the reports do not say that. A $20 billion round is still very large by any historical standard. What it may signal is a change in how much investors are willing to pay per dollar of expected growth when the cost of building computing capacity is rising. If a first close lands below the target, the company may rely more on follow-on investors, including the retail offering described by the FT, to reach it.
For OpenAI’s customers and partners, the immediate practical effect is likely limited. The company’s commitments to buy computing capacity from cloud and chip partners run over several years, and the funding round is one source of money among others, including revenue and debt. We have no information on any change to those commitments, and we are not suggesting one.
What to watch next
- Whether OpenAI or the lead investors confirm the size, valuation and closing date.
- Whether the $11 billion reported by the WSJ rises as other investors commit.
- Any change to IPO timing, which depends on market conditions.
- How the Anthropic IPO is received, since the two companies compete for the same investors.
- Earnings from chip and cloud companies that depend on AI infrastructure spending.
Key takeaways
- Media reports say OpenAI’s funding target fell from $30 billion to $20 billion.
- The WSJ reports $11 billion secured; the FT says UAE investors are leading.
- OpenAI has not confirmed the figures, so treat them as unconfirmed.
- Investor caution about AI infrastructure spending is cited as a factor.
- A smaller round is not by itself evidence of financial trouble.
Frequently asked questions
How much is OpenAI now reported to be raising?
The Financial Times reports a target of $20 billion, lowered from $30 billion, with a first close expected to come in below that figure.
Who is leading the round?
According to the FT, a group of investors from the United Arab Emirates is expected to lead it, followed by a retail offering for wealthy individuals.
Has OpenAI confirmed this?
No. TechCrunch said it had contacted OpenAI for comment, and the details come from reports by the Financial Times and the Wall Street Journal.
