OpenAI, the company behind ChatGPT, has raised $6.6 billion in the largest venture capital funding round ever. This new investment values the AI startup at $157 billion, according to a report by Crunchbase. The funding round led by Thrive Capital, which contributed around $1.3 billion, with an option to invest an additional $1 billion by 2025. Other participants in the round included Microsoft, Nvidia, SoftBank, Khosla Ventures, Altimeter Capital, Fidelity, and MGX.

Microsoft reportedly invested close to $1 billion, Nvidia contributed $100 million, and SoftBank put in $500 million, per The Wall Street Journal. The fresh capital injection will enable OpenAI to expand its AI research, boost computing power, and continue developing tools to address complex problems, the company stated in a blog post.

There are, however, unique conditions tied to the funding. The Financial Times reported that OpenAI has requested that investors avoid supporting rival AI startups like Anthropic and xAI.

Already the most well-funded AI startup globally, OpenAI’s massive new round sets it apart in the AI industry. While Elon Musk’s xAI raised over $6 billion earlier this year, OpenAI’s valuation far exceeds its competitors. Anthropic has raised $9.7 billion to date, while AI ventures like Cohere and Mistral hold funding amounts closer to $1 billion.

OpenAI’s need for such a large capital infusion is clear — its operations require billions in resources to stay ahead. The company has reportedly spent $7 billion on model training and $1.5 billion on staffing. CEO Sam Altman once noted that training GPT-4 alone cost over $100 million. Maintaining services like ChatGPT, which once had daily operational costs of $700,000, also demands significant investment.

ChatGPT remains a market leader, with over 250 million users, 10 million of whom are paying subscribers. OpenAI’s projected annual revenue stands at $3.4 billion, with ChatGPT alone expected to bring in $2.7 billion this year, according to internal documents shared by The New York Times.

Microsoft, a key partner with nearly $14 billion invested in OpenAI, has built its productivity products using OpenAI’s models. Apple has also integrated ChatGPT into its AI suite. OpenAI estimates that its revenue will reach $100 billion by 2029 — a figure comparable to Nestlé’s annual sales — but faces stiff competition.

Competitors like Runway and Luma Labs have released high-quality video generation models ahead of OpenAI. Meanwhile, Anthropic and Google continue to develop AI products that rival ChatGPT. Companies like Meta, xAI, and Black Forest Labs are pushing boundaries with their own AI models, putting more pressure on OpenAI to maintain its market dominance.

In response to these pressures, OpenAI is considering increasing the price of its premium ChatGPT Plus subscription from $20 to $44 per month by 2029. It may also restructure its governance model to allow for more investment opportunities. Currently, OpenAI’s for-profit division is controlled by a nonprofit that limits investor returns, but Sam Altman has hinted that OpenAI could shift away from this structure soon.

In fact, Bloomberg reported that the completion of the $6.6 billion funding round was contingent on OpenAI transitioning to a for-profit model within two years, allowing investors to recoup their funds if the transition doesn’t happen. This change could free OpenAI to pursue large, capital-intensive projects, such as building its own AI chips and data centers, reducing its reliance on Nvidia.

Despite the funding success, OpenAI faces internal challenges. Several high-profile executives have recently left the company, including CTO Mira Murati, chief research officer Bob McGrew, and research VP Barret Zoph. Other key departures include research scientist Andrej Karpathy, co-founder Ilya Sutskever, safety leader Jan Leike, and co-founder John Schulman. President Greg Brockman is also on sabbatical. Of the original 13 people who founded OpenAI in 2015, only three remain.

The future holds exciting possibilities for OpenAI as it navigates these challenges and continues to shape the AI industry.