Report: OpenAI lowers funding target to $20 billion
Per the Financial Times, OpenAI cut its new round's target from $30 billion to $20 billion, a sign investors are growing wary of massive AI spending.
OpenAI, the maker of ChatGPT, is at a delicate moment: ahead of its IPO, raising money is no longer as easy as it was.
What happened
According to the Financial Times, OpenAI lowered the target for its new funding round from $30 billion to $20 billion, with a first close expected to be even lower.
The numbers over time
| When | Target and valuation |
|---|---|
| September 2026 | $30B at a $1.4 trillion valuation |
| October 2026 | $30B at a $1.25 trillion valuation |
| End of October | $20B (FT) |
- Per the FT, a group of investors from the UAE will lead the round.
- A later offering for wealthy individuals could bring the total to $20 billion.
- The Wall Street Journal says OpenAI has secured $11 billion so far, with a "tepid" response from some large investors.
The problem: why are investors hesitant?
- Huge spending: AI companies pour billions into data centers and chips. Per the WSJ, OpenAI itself projects burning about $85 billion in 2028.
- Tech sell-off: wary of AI infrastructure spending, Wall Street investors have pushed tech stocks down.
- Competition: per Sensor Tower, ChatGPT's share of the AI assistant market fell below 50% in May as Gemini and Claude grew.
For context, in March OpenAI raised $122 billion at an $852 billion valuation. Demand is still big, just not what it was.
The response: what OpenAI is doing
- Leaning on Gulf investors (UAE) who are still investing heavily in AI.
- Opening the door to wealthy individuals through a private offering.
- Preparing for its IPO: OpenAI confidentially filed with the SEC in June.
What it means for you
If AI companies raise less money, free tiers may shrink while ads and subscriptions grow. OpenAI is already testing ads in ChatGPT.
*This is a report from the FT and WSJ; OpenAI hasn't commented.
Founder and editor-in-chief of Kurd Developers. Phone and tech news on YouTube, Instagram and TikTok.
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