SoftBank Board Approves Additional $22.5 Billion Investment in OpenAI with Corporate Restructuring Condition
Abstract
The board of directors of Japan's SoftBank Group has approved an additional investment of $22.5 billion in AI startup OpenAI, completing its total investment plan of $30 billion. The disbursement of these funds is conditional upon OpenAI completing its corporate restructuring and transitioning into a for-profit entity, paving the way for a potential future public listing.
According to a report by U.S. tech news website The Information on October 26 (ET), SoftBank Group's board of directors has approved an additional $22.5 billion investment in OpenAI. This constitutes the second tranche of funds to fulfill the group's $30 billion investment commitment to OpenAI. The report cited an informed source who disclosed this significant investment decision.
Investment Background and Timeline
In mid-April this year, SoftBank had initially agreed to invest $10 billion in OpenAI and planned an additional $30 billion investment in December. This follow-on funding will be part of OpenAI's $41 billion funding round announced in April this year.
Attached Conditions and Restructuring Requirements
The SoftBank board's approval for the disbursement of these funds comes with a crucial precondition: OpenAI must complete its corporate restructuring and transition into a for-profit entity by the end of this year. SoftBank had previously stated that if OpenAI's restructuring is unsuccessful, its investment amount would be reduced to $20 billion.
Strategic Significance
This new funding is critical for OpenAI, as it will be used to cover the escalating costs of training and running its artificial intelligence models. If completed, this would represent one of the largest single investments in the history of an AI startup, underscoring SoftBank's aggressive positioning in the rapidly expanding AI sector.
Despite facing massive funding requirements, the company has had no difficulty attracting investors. OpenAI recently arranged for investors to purchase shares from employees at a valuation of $500 billion, making it the world's most valuable startup.
Related Project Developments
Last month, OpenAI, Oracle, and SoftBank announced plans to build five new AI data centers in the United States to advance the Stargate project. This project is expected to involve investments of up to $500 billion and will have a 10-gigawatt scale, with the first AI data center to be established in Abilene, Texas.
Parties' Responses
SoftBank and OpenAI have not immediately responded to requests for comment.