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OpenAI
OpenAI is an artificial intelligence research company, best known for ChatGPT, the chat-based tool that took the world by storm. Indicate Interest in this unique opportunity to be part of one of the most revolutionary companies today. (Updated: minimum investment for OpenAI now starts from US$50,000)
Founded in 2015, OpenAI is an artificial intelligence (AI) research and deployment company, dedicated to advancing digital intelligence in the way that truly benefits humanity.1 OpenAI develops cutting-edge AI technologies, leveraging on deep learning, machine learning, reinforcement, and natural language processing technologies to build intelligent systems that understand and learn from data2.
Founded in 2015, OpenAI was originally focused on developing AI and machine learning tools for video games and other recreational purposes, starting out as a non-profit organisation. Less than a year later, it released its first AI offering: an open source toolkit for developing reinforcement learning (RI) algorithms called OpenAI Gym.
Over the subsequent couple of years, OpenAI shifted its focus towards broader AI development and AI research. In 2019, the organization transitioned from being a nonprofit entity to a for-profit one and formally adopted the name OpenAI LP, operating under the umbrella of its parent company, OpenAI Inc.
Fast forward to 2021, OpenAI introduced Dall-E, a generative AI model that analyses natural language text from human users and then generates images based on what is described in the text.
In 2022, the company launched one of it's most renowned product ChatGPT, and is widely recognised as the world's most advanced chatbot due to its capacity to offer comprehensive answers to users across an extensive spectrum of subjects.3
Geographical Exposure
Global
Company Sector
AI
Valuation
USD 98.9B
Management Fees
0.5%
Carried Interest
5%
Minimum Ticket Size
US$50K
*This does not include any additional expenses set aside to cater for the running costs of the vehicle
OpenAI drives revenue through various means - including licensing, subscriptions, and investments from their own OpenAI Startup Fund.4
1. Licensing: OpenAI primarily generates its revenue for the utilization of its models and products. For instance, the Dall-E image generation model is priced at a rate of $0.016 to $0.020 per image. Language models, on the other hand, are priced based on tokens, with 1,000 tokens roughly equivalent to 750 words. OpenAI expands its distribution and licensing fee revenue by partnering and integrating its products with different companies, such as Microsoft.
2. Subscriptions: OpenAI also monetizes through subscriptions to the premium version of their chatbot, ChatGPT Plus.
3. Investments: OpenAI also invests in AI-based startups using the OpenAI Startup Fund, which the firm launched in May 2021.The size of the fund stands at US$100 million, with a mandate to make big early bets on a relatively small number of companies.
Since its launch in 2022, ChatGPT the platform has experienced explosive growth, amassing 1 million users within 5 days after launching - setting a record for the fastest-growing user base for a consumer application in history.5 By January 2023, the platform is estimated to have reached 100 million monthly active users, just two months after launch. 6 The platform is now estimated to have approximately 180 million monthly active users. 7
OpenAI is generating revenue at a pace of US$1.3 billion a year, with the company generating more than US$100 million per month. The revenue pace, largely from subscriptions to its conversational chatbot, represents remarkable growth since the company launched a paid version of ChatGPT in February. For all of last year, the company’s revenue was just $28 million. Since the release of ChatGPT, OpenAI has become a closely watched barometer of demand for artificial intelligence that can help a wide range of industries improve efficiency of business tasks.8
In 2024, just seven years after being founded, OpenAI’s annual run rate hit the $2 billion revenue mark in December 2023 - setting the stage for continued growth as the company continues to advance its AI technologies.
Initially starting as a nonprofit organization, OpenAI transitioned to a "capped-profit" model in 2019 as OpenAI LP, combining elements of both for-profit and nonprofit structures into their business entity.
The for-profit subsidiary is fully controlled by the OpenAI Nonprofit (OpenAI, Inc.) via the wholly owning and controlling of a manager entity (OpenAI GP LLC) that has the power to control and govern the for-profit subsidiary (OpenAI Global, LLC). Profit allocated to investors and employees, including Microsoft, is capped, and all residual value created above and beyond the cap will be returned to the nonprofit.
Returns for first round of investors are reportedly capped at 100x their investment, and the current cap for investors in this round is at 4.3x. Microsoft will reportedly get a 75% share of OpenAI’s profits until it makes back the money on its investment, after which the company would assume a 49% stake in OpenAI.
OpenAI continues to expand its global reach, partnering with G42 in Dubai - as it eyes a middle east expansion, as well as establishing its first international expansion in London in 2023. With these strategic moves, OpenAI is poised to tap into the expanding global artificial intelligence (AI) market, which was valued at US$454billion in 2022 and is projected to surpass US$2trillion by 2032.
In 2019, OpenAI entered into a partnership with Microsoft, which involved a substantial investment of US$1 billion by the tech giant. Subsequently, Microsoft announced an extension of this partnership with OpenAI, committing an additional US$10 billion to the company.
In April 2023, OpenAI completed a share sale, raising US$300 million at an estimated valuation of around US$29 billion. Prominent firms such as Sequoia Capital and Andreessen Horowitz were among the investors participating in this funding round. 9
|
Name |
Title |
|
Greg Brockman |
Co-Founder, Chairman, President & Chief Technology Officer |
|
Brad Lightcap |
Chief Operating Officer |
|
Mira Murati |
Chief Technology Officer |
|
Ilya Sutskever |
Co-Founder & Chief Scientist |
|
Bryan Banisaba |
Chief of Staff |
|
Sam Altman |
Co-Founder & Chief Executive Officer |
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[1] OpenAI. Extracted 2 October 2023 https://techcrunch.com/2021/01/13/rapyd-raises-300m-on-a-2-5b-valuation-to-boost-its-fintech-as-a-service-api/#:~:text=Rapyd's%20customer%20base%20now%20numbers,services%20into%20their%20wider%20offerings.
[2] LinkedIn. Extracted 23 October 2023 https://www.linkedin.com/pulse/open-ai-product-strategy-business-model-mhd-al-hasan-pmp/
[3] Tech Target. Extracted 23 October 2023 https://www.techtarget.com/searchenterpriseai/definition/OpenAI
[4] Finty. Extracted 23 October 2023. https://finty.com/us/business-models/openai/
[5] Exploding Topics. Extracted 23 October 2023. https://explodingtopics.com/blog/chatgpt-users
[6] CNBC. Extracted 2 October 2023 https://www.cnbc.com/2023/01/23/microsoft-announces-multibillion-dollar-investment-in-chatgpt-maker-openai.html
[7] Reuters. Extracted 23 October 2023 https://www.reuters.com/technology/chatgpt-traffic-slips-again-third-month-row-2023-09-07/
[8] Reuters. Extracted 23 October 2023. https://www.reuters.com/technology/chatgpt-traffic-slips-again-third-month-row-2023-09-07/
[9] CNBC. Extracted 2 October 2023 https://www.cnbc.com/2023/01/23/microsoft-announces-multibillion-dollar-investment-in-chatgpt-maker-openai.html
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