Seizing the opportunity of ChatGPT's popularity, Microsoft plans to invest 10 billion dollars in its developers
Beijing, January 10 (Xinhua) Microsoft is in talks to invest $10 billion in OpenAI, the developer of the popular chat robot ChatGPT, according to people familiar with the matter. Since its launch last month, ChatGPT has excited ordinary users and artificial intelligence experts. Microsoft has previously invested $1 billion in OpenAI.
Microsoft will increase its investment in OpenAI, which will also include other venture capital firms, valuing OpenAI at $29 billion, including new investments, according to people familiar with the matter. It is not clear whether the deal has been finalized, but documents sent by OpenAI to potential investors in recent weeks outlining its terms show that the financing deal aims to be completed by the end of 2022.
Microsoft's capital injection will be part of a complex deal. Microsoft will earn 75 per cent of OpenAI's profit before it recoups its investment. It is not clear whether the money OpenAI spends on Microsoft's cloud computing division will be included in Microsoft's profits. After Microsoft recovers its investment, the deal will revert to a structure that reflects the ownership of OpenAI, in which Microsoft holds 49 per cent, other investors hold another 49 per cent and OpenAI's non-profit parent gets 2 per cent. Each investor has a different profit ceiling, which is not common in venture capital. Venture capitalists often want a return of 20 or 30 times.
The specific terms and the amount of investment may change, and the deal may break down. $29 billion is a high valuation for OpenAI. After all, the company hasn't found its own business model, and $10 billion is a high investment for Microsoft shareholders. It was reported last week that OpenAI would allow its employees and early investors to sell their shares at a valuation of $29 billion. Microsoft is said to be ready to integrate the artificial intelligence technology behind ChatGPT into Bing search and Office suites.
Microsoft and OpenAI declined to comment.
