The week's developments in investing & technology, explained | 20.09.24

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Is OpenAI's nonprofit model changing?

It's looking increasingly likely that OpenAI will alter its nonprofit structure next year.

Source: Getty Images/Edited

Fresh off the heels of their impressive launch of o1, an AI model that can reason through complex problems, the company is now reportedly in talks to raise a staggering $6.5 bn funding round at a $150 bn pre-money valuation. But this cash infusion may come with strings attached.

At the heart of the matter is OpenAI's unique nonprofit structure—a complex corporate structure that's becoming a sticking point for investors. Sources close to the deal revealed that the funding hinges on OpenAI's ability to remove the profit cap for investors — a hallmark of its current model.

According to Fortune, CEO Sam Altman reportedly signalled to employees that 2024 could usher in a new era for the company. This shift would align OpenAI more closely with the profit-driven ethos of tech giants — and potentially unlock an even greater torrent of investment.

Despite industry concerns, OpenAI has been steadily inching towards a more commercial model. The company has already raised over $10 bn, mostly from Microsoft, using its current structure. What's more, its ChatGPT service now boasts over 200 million users.

With its last valuation hitting $80 billion in February, this new funding round — if successful — would nearly double the company's worth. That being said, this pivot still raises questions about OpenAI's original mission of developing safe, beneficial AI for humanity.

Now read the rest of the CogX Newsletter

Chart of the week

Source: PitchBook

The Federal Reserve's recent decision to cut interest rates by half a percentage point is expected to fuel a surge in M&A activity, particularly in Europe. This could lead to a significant increase in M&A activity, especially considering the recent slowdown in deal volume.

Top Stories

"The Godmother of AI” tackles spatial intelligence: World Labs, a new startup founded by "Godmother of AI" Fei-Fei Li, aims to build AI models with "spatial intelligence" that can understand and interact with the 3D world. The freshly minted company just brought in a whopping $230 million in funding, backed by tech titans like Ashton Kutcher and Eric Schmidt.

AI's next big leap has investors buzzing: A fresh wave of reasoning-focused AI models is hitting the scene, and investors are taking notice. VCs are betting these AIs will power more reliable AI agents and open up more new and exciting possibilities across industries.

How AI is transforming investing

Salesforce Ventures doubles down on AI: Salesforce Ventures, the venture capital arm of Salesforce, has announced a new $500 million AI fund, bringing its total AI fund to $1 billion. This hefty chunk of money shows just how much faith big tech still has in the future of the tech.

BlackRock and Microsoft partner on massive AI fund: Investment giant BlackRock is teaming up with Microsoft and Abu Dhabi to launch a $30 billion AI-focused fund. This megafund will invest in data centres and energy infrastructure to support the growing demands of AI technologies.

Nvidia to acquire OctoAI: Chipmaker Nvidia is reportedly making a strategic move to strengthen its AI capabilities by acquiring OctoAI, a Seattle-based startup known for its AI optimisation software. This acquisition could help Nvidia enhance its software and cloud computing services, especially as it faces increased scrutiny from U.S. antitrust officials.

Startups

Runway inks deal with a major Hollywood studio: Generative AI startup Runway has inked a deal with Hollywood studio Lionsgate to train a custom video model on their film catalogue. However, the partnership comes amidst growing controversy over AI's impact on the entertainment industry.

AI startup Sakana hits a $1.5 billion valuation: They just snagged $214 million in series A funding from some of Japan's biggest players, including major financial institutions and tech giants. With this fresh cash injection, Sakana AI is hoping to put Japan on the AI map.

Jobs

• Vice President | Golub Capital | New York | $175k - $225k

• VC Associate | The Schmidt Family Foundation | San Francisco | $140k – $160k

• Partner at Search Fund | Nova Founders Capital | London | £80k

Noteworthy deals

• Fal.ai, a San Francisco-based platform hosting media-generating AI models has raised $23m in Series A funding led by Kindred Ventures and Andreessen Horowitz.

   

• 11x.ai, a San Francisco-based startup building AI bots for process automation has raised $24m in Series A funding led by Benchmark.

   

• Inbolt, a Paris-based startup developing AI-powered 3D vision systems for industrial robots has raised €15m in Series A funding led by Exor Ventures.

   

• Timefold, a Belgian AI startup developing planning optimisation software, has raised €6m in seed funding led by Lakestar.

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Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.