After securing a whopping $6.6 billion funding round, ChatGPT-parent OpenAI has bagged a $4 billion revolving credit line.
What Happened: The new credit facility will bolster its liquidity to $10 billion, allowing the AI startup to invest in high-cost computing capacity including Nvidia Corporation’s NVDA chips.
“This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities,” said OpenAI CFO Sarah Friar, in a blog on Thursday.
The credit line is facilitated by a consortium of banks: JPMorgan Chase JPM, Citigroup, Inc. C, Goldman Sachs GS, Morgan Stanley MS, Banco Santander S.A. SAN, Wells Fargo WFC, Sumitomo Mitsui Banking Corporation, UBS Group AG UBS, and HSBC Holdings plc HSBC.
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Why It Matters: Earlier this week, OpenAI, valued at nearly $157 billion, raised funds from returning venture capital investors such as Thrive Capital and Khosla Ventures.
Microsoft Corporation MSFT, which has already invested approximately $13 billion into the AI firm over the last five years, and new investor Nvidia, also participated in the funding round.
Despite major executive changes, including the sudden exit of CTO Mira Murati, investors remain optimistic about OpenAI’s growth prospects.
However, OpenAI has also faced criticism from Elon Musk, who accused the company of unfair funding practices.
On the other hand, analysts expect a “tidal wave” of AI spending, with OpenAI’s latest valuation seen as a trigger for this growth stage.
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