OpenAI Slashes Fundraising Goal by $10 Billion as AI Stock Selloff Hits Investor Interest

OpenAI has reduced its fundraising target by $10 billion to $20 billion as falling technology stocks and weaker investor demand complicate financing plans ahead of its anticipated 2027 public listing.

OpenAI Cuts Fundraising Target After Investor Pullback

According to the report on Oct. 31, OpenAI reduced its $1.4 trillion valuation to $1.25 trillion. The ChatGPT developer initially sought $30 billion during September discussions with institutional investors.

However, after technology stocks took a hit, some investors trimmed their investments. The company had been touting the funding round as an investment opportunity prior to the expected listing.

OpenAI set October 30 as the deadline for investors to submit their initial funding commitments. The Wall Street Journal reports it raised approximately $11 billion in the initial round of fundraising. It now aims to source more investments to make up to its revamped $20 billion goal.

Earlier, OpenAI sought a $1.4 trillion valuation while preparing for a possible 2027 IPO. . The valuation, its latest estimate, is $150 billion less than the fundraising expectations it had earlier.

UAE Investors Expected to Lead OpenAI Funding Round

A consortium of United Arab Emirates investors, including MGX, could become the round’s largest participant. The agreement would put OpenAI in a position to lease newly developed computing capabilities in the UAE.

Other potential investors are Founders Fund, Coatue, Sequoia Capital, Andreessen Horowitz and Softbank.

The company reportedly plans another offering targeting wealthy investors at the same $1.25 trillion valuation. OpenAI raised $122 billion in March, supporting its plans to expand computing infrastructure and AI development.

AI Stock Selloff Adds Pressure Ahead of Anthropic IPO

The changes in fundraising come after technology stocks surged in selling pressure in the wake of concerns about spending on AI infrastructure. The Nasdaq Composite shed 2.9% to extend losses from a record on Oct. 6.

Meanwhile, rival Anthropic is preparing for its anticipated November stock market debut. As earlier coverage of Anthropic’s IPO explained, its share-release structure could permit some investors to sell shares before standard restrictions expire.

The two firms are trying to raise institutional capital as they continue to build more and more costly AI systems. In 2027, OpenAI is expected to go public as well, according to a previous report.

OpenAI, Sequoia Capital, Founders Fund and SoftBank did not comment on the reported change in fundraising.