SoftBank (SFTBF) is looking to invest in OpenAI for the first time. The Japanese conglomerate led by billionaire Masayoshi Son has reportedly agreed to spend $500 million through its second Vision Fund in a round that values the maker of ChatGPT at a staggering $150 billion, The Information reported today (Sept. 30). The round will be led by Thrive Capital, which is investing $1 billion. Other participants may include Microsoft (MSFT), Nvidia (NVDA), Tiger Global Management and United Arab Emirates-backed fund MGX.
SoftBank’s involvement would represent Son’s most significant bet in AI to date. It will also follow the mistakes made by the conglomerate’s first Vision Fund, which improperly supported WeWork and lost heavily after its collapse in 2023. So far, Son’s most notable AI investment has been SoftBank’s majority ownership of Arm, a UK-based chip designer. SoftBank in May reported $4.6 billion in revenue for its Vision Funds for the fiscal year, driven largely by Arm’s 2023 IPO.
Over the past few years, the conglomerate has been “on the defensive,” Son said during SoftBank’s 2023 annual shareholder meeting last June. “Three years ago, we didn’t have a lot of cash on hand,” Son said at the time, noting that SoftBank has since raised more than $35 billion. “We’re ready to shift into trial mode,” he said, adding that his biggest interest was playing a major role in the “AI revolution.”
Besides participating in the investment round of Perplexity AI, an AI-powered search engine, earlier this year, the company has largely taken a back seat to AI startups and has reportedly passed on investments to OpenAI rivals such as Mistral AI, Anthropic and -Cohere. Its willingness to support OpenAI, however, should come as no surprise—Son has repeatedly sung the company’s praises, claiming to be a “heavy ChatGPT user” and calling OpenAI CEO Sam Altman “one of the most important people on Earth.” ” SoftBank and OpenAI did not respond to The Observer’s requests for comment about SoftBank’s investment.
Is SoftBank late to the AI party?
SoftBank’s bet on OpenAI is relatively late by venture capital standards, given its already large valuation. But the high-flying AI company still has room to grow, according to analysts. The company hit $3.4 billion in annual revenue in June and is “on track to $5 billion in ongoing annual revenue, driven primarily by its ChatGPT product,” Brendan Burke, emerging technology analyst for PitchBook, told the Observer by email.
PitchBook estimates that OpenAI will benefit from the generative AI software market poised to double next year and surpass $30 billion, he added. “This revenue growth supports growth in numbers, which encourages employees to stay with the company and progress to the billion dollar valuation that CEO Sam Altman believes the company can grow,” Burke said.
SoftBank’s investment comes at a time of uncertainty for OpenAI. Last week the company lost three top executives, and Altman is reportedly planning a restructuring that will change the company’s profitability. “Leadership changes are part of the nature of companies, especially fast-growing and demanding companies,” Altman said in a post on X announcing the latest departure.
