Cathie Wood’s Ark Invest Tops OpenAI Bet Amid $4 Bln Credit Facility Launch

Cathie Wood’s ARK Invest was one of the investors in OpenAI’s recent funding round. The asset manager contributed about $250 million to the $6.6 billion capital raise As a result, the Sam Altman-led Artificial Intelligence (AI) firm is now the Ark Venture Fund’s third-largest holding.

ARK Invest Increases OpenAI Stake

According to the ARK Venture Fund website, ts investment in OpenAI accounts for about 5% of the its total assets. This new development suggests that the investment asset management firm is intentional about increasing its stake in the AI firm. It is worth noting that ARK’s stake was at 4% in April, when it made its first investment.

Considering how Cathie Wood had earlier sidestepped OpenAI to name Elon Musk’s Tesla the biggest AI project, the new development is shocking.

Wood made this inference while talking with Valerio Baselli, a senior international editor with Morningstar, about robo-taxis or autonomous taxi platforms. She claimed that the sector will take the lion’s share of the AI market, adding that it is a “winner takes most market.”

OpenAI may have outperformed ARK Invest CEO’s expectation with its new valuation of $157 billion. The AI firm reached this milestone in barely nine months as it reported a valuation of $86 billion at the beginning of this year. The $6.6 billion funding round has cemented its position as one of the most valuable private companies in the world.

Apart from ARK Invest participation, the recent $6.6 billion funding round had investors like Microsoft, AI chip-maker NVIDIA and Thrive Capital, which led the fundraiser with $1 billion. Noteworthy, the funding came in the form of convertible senior notes.

OpenAI Secures Credit Line to Compete With Google

Only a few days after the $6.6 billion funding round, OpenAI announced that it secured a new $4 billion revolving credit line. The credit facility was from some of the top financial leaders including JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC.

OpenAI’s finance chief Sarah Friar mentioned that the credit facility further strengthens the ChatGPT maker’s balance sheet. This is in addition to providing flexibility to seize future growth opportunities.

The firm strongly believes that this credit facility will boost its liquidity to $10 billion. With this financial status, it can conveniently purchase costly computing capacity, including chips from Nvidia. Ultimately, this will enhance its position in its race with tech giants such as Alphabet-owned Google.

Beyond Google, OpenAI also has xAI to compete with. With Elon Musk always criticizing OpenAI’s business model, these funding might help it boost its push toward becoming a for-profit entity. Betting on both firms is also considered a smart strategy from the Cathie Wood-led Ark Invest.