OpenAI Cuts Funding Round Target to $20 Billion From $30 Billion

OpenAI has scaled back its ongoing funding round, lowering the target from $30 billion to $20 billion, according to people familiar with the matter. The company has also reduced the valuation it is seeking from $1.4 trillion to $1.25 trillion.

OpenAI set Friday as the deadline for investors to commit to the round. The first close is expected to raise less than $20 billion, as some investors have cut the amounts they had planned to put in. Reports say the company has so far secured roughly $11 billion in commitments, and that several large backers are approaching the deal more cautiously than expected.

UAE investors lead the round

The biggest participant is expected to be a consortium of investors from the United Arab Emirates, including the state-backed technology investment firm MGX. As part of the arrangement, OpenAI may get the option to rent newly built computing capacity in the region.

Venture firms such as Founders Fund, Coatue, Sequoia Capital and Andreessen Horowitz are also expected to take part. A later process for wealthy individual investors is planned, and they could invest at the $1.25 trillion valuation.

Market jitters over AI spending

Market timing appears to have played a role. Concerns about the heavy spending by AI companies and tech giants on data centers, chips and other infrastructure have dampened investors' appetite for risk. The tech-heavy Nasdaq fell 2.9% on Friday, leaving it 7.8% below its record close of October 6.

OpenAI also has reasons to move quickly. It is targeting an IPO in 2027 and wants to close the round before the expected listing of Anthropic, which is courting the same pool of investors.

The revised numbers suggest that appetite for AI has not disappeared, but investors are scrutinizing sky-high valuations and fast-growing infrastructure costs more closely. Whether OpenAI can reach even the lowered $20 billion goal will become clear as the round progresses.