OpenAI's $30 billion raise comes up short as the AI selloff hits private markets

The skim

• OpenAI has about $11 billion committed to its latest funding round, less than half of the $30 billion it first set out to raise, the Wall Street Journal reported Friday.
• The Financial Times says OpenAI cut the round's target to about $20 billion, at a $1.25 trillion valuation, down from the $1.4 trillion it first pitched. The first close is expected to land below even that, because some investors trimmed their checks during this week's tech selloff.
• OpenAI plans to pitch family offices and wealthy individuals in the coming weeks, according to the Journal. Friday was its deadline for commitments.

What happened

Last week, OpenAI was closing in on up to $30 billion at a $1.25 trillion valuation, already a step down from its first $1.4 trillion pitch. Then the market turned. On Friday, the Financial Times reported, via Reuters, that OpenAI had cut the target by $10 billion, to about $20 billion. The FT said the first close, timed to Friday's deadline, is expected to come in below that because some investors reduced their allocations.

Separately, the Wall Street Journal reported that the commitments stood at about $11 billion, and that OpenAI expects to raise more by pitching family offices and rich individuals in the coming weeks. The FT says a group of investors from the United Arab Emirates, including state-backed fund MGX, is expected to be the biggest backer, with OpenAI getting an option to lease new computing capacity in the region. Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to invest, and wealthy individuals will get a later retail offering at the same $1.25 trillion price. OpenAI and the investors didn't immediately respond to Reuters.

Why it matters

This is the clearest sign yet that this week's AI selloff is reaching private markets. The Nasdaq fell 2.9% on Friday and finished 7.8% below its Oct. 6 record close, Reuters reported, after Alphabet, Amazon and Intel showed how expensive the AI buildout has become. Some of the investors who were lined up a week ago are now writing smaller checks, according to the FT.

The money itself isn't a crisis. Even $11 billion is a large private round, and OpenAI raised $122 billion at an $852 billion valuation in March. What it shows is that investors have more say on price now. It also sets up an awkward comparison with Anthropic, which filed to go public and is tapping many of the same investors. According to the Journal, Anthropic more than doubled its quarterly revenue to $11.6 billion in the second quarter, while OpenAI's grew about 18% to $6.7 billion.

What's next

Watch the final size of the round and whether the UAE compute deal is announced with it. OpenAI is aiming for a stock market listing in 2027 and wanted this round done before Anthropic lists, Reuters has reported. If the retail offering and family offices can't close the gap, $1.25 trillion may not hold as the price tag for that IPO. All of this comes from people familiar with the talks, not from OpenAI.

Sources: Wall Street Journal (via Investing.com), Financial Times (via Reuters on Investing.com) and The Next Web.