Jan 9 (Portal) – Microsoft Corp (MSFT.O) is in talks to invest $10 billion in OpenAI, owner of ChatGPT, which values the San Francisco-based company at $29 billion will, Semafor reported Monday, citing people familiar with the matter.
The funding includes other venture firms, and deal documents have been sent to potential investors in recent weeks, with a goal of completing the round by the end of 2022, the report said.
Microsoft declined comment, while OpenAI did not immediately respond to Portal’ request for comment.
This follows a Wall Street Journal report saying OpenAI is in talks to sell existing shares worth around $29 billion, with venture capital firms including Thrive Capital and Founders Fund buying shares from existing shareholders.
OpenAI, founded by Tesla Inc (TSLA.O) CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing on November 30th. A chatbot is a software application designed to mimic a human-like conversation based on user input.
The Semafor report states that the funding terms include Microsoft receiving 75% of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to monetize ChatGPT and other products like the Dall-E imaging tool .
Upon reaching that threshold, Microsoft would have a 49% stake in OpenAI, other investors would get another 49%, and OpenAI’s nonprofit parent company would get 2%, the report said, without clarifying what the stakes would be until Microsoft got its money would get back.
Microsoft, which invested $1 billion in OpenAI in 2019, was working to launch a version of its Bing search engine that uses the AI behind ChatGPT, the information reported last week.
Reporting from Aarati Krishna in Bengaluru; Edited by Savio D’Souza
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