OpenAI has set up a $4 billion credit line from an array of banksgo777, adding to its financial firepower after securing a $6.6 billion round of new investments, the company said on Thursday.
The debt financing underscores OpenAI’s ability to tap some of the world’s biggest institutions for increasingly huge sums of money — and the ChatGPT creator’s ever-growing need for more capital.
Just one day earlier, OpenAI announced that it had secured a new round of equity investments that values the artificial intelligence company at $157 billion, making it one of the most valuable privately held start-ups. Among those putting in money are the investment firm Thrive Capital, Microsoft, Nvidia and SoftBank.
In a blog post on Thursday, OpenAI said it had also set up a revolving line of credit with JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, the Japanese bank SMBC, UBS and HSBC.
Fast-growing venture-backed companies often seek out such credit lines — effectively a corporate equivalent to a credit card — to add to their financial resources without having to give up more equity. Companies can borrow up to a certain limit, and the credit line is restored when existing borrowing is paid back.
The continued fund-raising signals the enormous amounts of money required to run OpenAI’s services, which rely on expensive computing power from companies like Microsoft to power their products.
ChatGPT, the marquee A.I. chatbot product from OpenAI, sends millions of queries per day back to the cloud servers that power the technology. Those cloud services are in high demand as more companies push further into artificial intelligence, driving up costs for everyone.
“This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities,” Sarah Friar, OpenAI’s chief financial officer, said in a statement.
An OpenAI spokeswoman did not provide further comment beyond the blog post.
Credit lines like this provide banks with an opportunity to deepen their relationships with desirable clients, especially those that may eventually pursue big-ticket deals such as acquisitions or initial public offerings. (In 2011, Facebook secured a $1.5 billion revolving credit line from several banks, which ended up becoming underwriters for its initial offering the next year.)
OpenAI’s popularity has grown immensely in the past year, with more than 350 million people using its services each month, according to internal documents viewed by The New York Times. That is more than triple the number just six months ago.
But OpenAI’s costs have also soared. The company is on track to lose at least $5 billion in 2024, the documents said, and does not anticipate its costs to come down any time soon. The company estimates it will lose more than $11 billion in 2025, the documents said.
(The Times sued OpenAI and Microsoft in December for copyright infringement of news content related to A.I. systems.)go777