OpenAI to fund $40 billion in a SoftBank-led investment to bolster AI development.

(Reuters) – OpenAI announced on Monday that it will receive up to $40 billion in a new investment round led by SoftBank Group (9984.T) at a $300 billion valuation to promote AI research, expand computing infrastructure, and improve its tools.

The Japanese tech investment company said in a statement that it has agreed to fund OpenAI with $10 billion in mid-April and an additional $30 billion in December, subject to the AI startup being for-profit by the end of the year.

SoftBank intends to distribute $10 billion of its entire investment to other co-investors, whom it did not name. According to a person familiar with the subject, Microsoft (MSFT.O), Coatue Management, Altimeter Capital, and Thrive Capital will provide the remaining financing.

If OpenAI’s reorganization fails, SoftBank warned its total investment in the round will be reduced to $20 billion.

OpenAI stated that it aims to provide increasingly sophisticated tools to the 500 million individuals who use ChatGPT every week.

Investor interest in the artificial intelligence sector has increased dramatically in recent years, owing to the widespread use of chatbots and the introduction of advanced AI agents.

Enterprises have incorporated AI technology to optimize operations and improve customer experiences, while venture capital companies battle to fund innovative AI startups.

San Francisco-based OpenAI concluded a $6.6 billion investment round in October, valuing the business at $157 billion. The latest round of investment would almost treble the AI startup’s worth.

“OpenAI has very ambitious plans on many fronts and needs a lot of capital to achieve these goals,” said Gil Luria, analyst at D.A. Davidson & Company.

“The list of investors wanting to support that scope has shrunk and may be largely limited to SoftBank, which itself may not have the necessary capital.”

SoftBank intends to finance the first $10 billion by borrowing from Mizuho Bank and other financial institutions.

OpenAI is collaborating with SoftBank and Oracle (ORCL.N) to build a network of data centers for the $500-billion Stargate project, which aims to power AI workloads in the United States.

OpenAI, which is supported by Microsoft, also aims to change its structure, stating that it would establish a public benefit company to attract additional investment and resources while balancing shareholder interests with public advantages.

SoftBank was advised by Morrison Foerster, a law firm in the United States.

With this fresh financing, OpenAI will enter the ranks of the most valuable private startups, like SpaceX, China’s ByteDance, and Stripe.