Cutting Edge

“Cutting Edge” – a cartoon that illustrates some of the reasons for OpenAI’s new monster valuation.

According to the Wall Street Journal, OpenAI is closing a new funding round at $100B+ valuation raising over $6BN, which would make it the highest valuation of any AI startup.

Creating a successful AI company is expensive, even one with a subscription-based revenue model.

The Information says OpenAI is on track to lose nearly $5 billion by year end, and that it has already burned through $8.5 billion on AI training and staffing.

While many might balk at this huge valuation for a company so early in its journey, the ‘winner takes all’ opportunity from solving Artificial General Intelligence (AGI) will skew most value to the company that first achieves this.

According to P aul Roetzer, CEO of the Marketing AI Institute, “once we hit AGI, everything is reset. Once we get here, we are now looking at the reality of wide scale workforce disruption. You’re completely resetting business.”

Meanwhile, one of the potential investors in the next round told the Financial Times, that they rationalized the high valuation as “I’m walking into a gunfight with Google and Facebook, and I have Microsoft and Apple behind me. It’s not such a bad thing from a distribution and branding perspective.”