OpenAI Secures $4 Billion Credit Line, Boosting Liquidity to Over $10 Billion

OpenAI has secured a $4 billion revolving line of credit, adding to its recent $6.6 billion funding round and bringing the company’s total liquidity to over $10 billion. 

This new financial boost included institutions from across nine banks including JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, and Santander.

Aside the OpenAI liquidity boost, the credit line will also enable the company’s further expansion, as it comes a day after OpenAI’s valuation rose to $157 billion, becoming one of the most valuable private tech companies globally. 

The credit facility provides OpenAI with the financial flexibility to continue investing in infrastructure, talent acquisition, and research, while also addressing the growing demand for its generative AI technology, which gained global attention following the launch of ChatGPT in late 2022.

According to insiders, the credit line has the option to expand by an additional $2 billion, although it carries a relatively high interest rate of 6%, which could become a costly burden if the funds are accessed over time. 

Nevertheless, the arrangement allows OpenAI to maintain agility as it scales its operations, particularly in AI research and development, requiring high investment in computing capacity, such as Nvidia chips, which are important for running large-scale AI models.

The tech giant is forecast to generate $3.7 billion in revenue for 2024, though its operational costs are expected to result in losses of approximately $5 billion this year. Despite these losses, OpenAI is projecting substantial growth, with revenues expected to climb to $11.6 billion by next year.

The company has been undergoing a series of internal changes, including restructuring into a for-profit entity. Also, OpenAI CEO Sam Altman has denied rumours of receiving a large equity stake but acknowledged that the board has been considering restructuring options to better align with the company’s goals.

The funding round was led by Thrive Capital, with additional participation from Nvidia and Microsoft, OpenAI’s long-time strategic partner. This partnership with Microsoft is particularly noteworthy, given the role of Microsoft’s Azure cloud platform in supporting OpenAI’s AI infrastructure. 

Despite issues over high costs and leadership exits, OpenAI’s investors remain positive about the company’s growth in the AI sector.