Artificial intelligence Venture

As OpenAI Reportedly Aims For $1B In Revenue By 2024, A Closer Look At Who’s Backing The Biggest Names In AI

Illustration of founder with robot shadow.

OpenAI, the organization behind the buzzy artificial intelligence bots ChatGPT and DALL-E, projects that it will be able to generate $1 billion in revenue by 2024, Reuters reports.

Citing sources briefed on OpenAI’s recent pitch to investors, Reuters said the San Francisco-based organization expects $200 million in revenue in 2023 and $1 billion by 2024. OpenAI makes money by charging developers to license its technology to generate text and images.

OpenAI was co-founded in 2015 by Elon Musk, Sam Altman and others. It first drew mainstream attention for DALL-E, an AI that can create detailed, realistic images (whether to call them “art” is a matter of debate) in any style of almost any subject, based on written prompts from users.

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Last month, OpenAI unveiled ChatGPT to the public. The chatbot, which can perform search queries and write entire essays based on prompts, immediately garnered attention in the tech and media worlds — not least from writers worried it’s so good, it could soon replace us.

Big bucks go to AI

Artificial intelligence as a whole is one of the most heavily funded startup sectors. Funding to AI startups in recent years has accounted for as much as 10% of all global venture capital dollars invested, Crunchbase data shows. Last year, nearly $70 billion in venture capital went to AI startups worldwide.

Along with OpenAI, the most highly valued startups in the space include data and AI company Databricks (valued at $38 billion), driverless auto company Cruise ($30 billion), and AI writing assistant service Grammarly ($13 billion). 

OpenAI alone has raised more than $1 billion in venture funding, according to Crunchbase data, with Microsoft as its largest investor. Khosla Ventures, Sequoia Capital, Tiger Global, Y Combinator and Bedrock Capital have also provided capital. 

The organization was recently valued at $20 billion in a secondary sale of its shares, Reuters reported. Its supporters see potential for its technology to generate huge amounts of revenue by automating even creative tasks like writing and design. 

Still, several prominent VC firms declined to invest earlier this year, “questioning if it could justify a higher valuation or compete with rivals like Alphabet Inc.-owned Google,” Reuters reported, citing sources familiar with OpenAI’s fundraising efforts. (Though the report didn’t say, it’s reasonable to assume OpenAI’s unusal cap on venture returns played a role in investor reticence as well: In 2019, OpenAI switched to a “capped profit” structure that limit the returns for its investors to 100x, or possibly less in the future.)

Microsoft also provides OpenAI with computing power. The software giant has reportedly considered increasing its stake in OpenAI, believing that its artificial intelligence technology could generate business for Microsoft’s cloud business as more companies embrace AI and automation.

“We’re going to see advances in 2023 that people two years ago would have expected in 2033,” Microsoft President Brad Smith told Reuters in an interview. “It’s going to be extremely important not just for Microsoft’s future, but for everyone’s future.”

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Illustration: Dom Guzman

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