OpenAI has cut the target for its ongoing funding round from $30 billion to about $20 billion, the Financial Times reported, and the pre-money valuation has slipped from the originally envisioned $1.4 trillion to $1.25 trillion. Reuters later relayed the same core figures, and both outlets cite people familiar with the matter. OpenAI did not immediately respond to requests for comment, and there is no official word yet on the final size or terms of the round.
According to the report, OpenAI set an October 30 (US time) deadline for investor commitments. Some investors have trimmed their allocations, and the first close is expected to come in below $20 billion. The round will then open to high-net-worth individuals at the same valuation, which could bring the total back to roughly $20 billion.
The Wall Street Journal put the figure lower: commitments secured so far are about $11 billion, and OpenAI expects to keep raising money over the coming weeks. The two reports use different yardsticks, one describing the target and the other the confirmed commitments, and read side by side they point to a sizable gap.
Two cuts in a month
Lining up the milestones of this round, the adjustment happened in two steps:
- In late September, several outlets reported that OpenAI planned to raise at least $30 billion at a $1.4 trillion valuation;
- Around October 22, CNBC and others reported that the valuation target had fallen to $1.25 trillion, with the size still described as up to $30 billion, led by investors from the UAE and Coatue;
- On October 30, the size target was cut by another $10 billion.
Going back further, OpenAI closed a $122 billion round in March this year at a post-money valuation of $852 billion. Even if the deal closes at a $1.25 trillion pre-money valuation, the valuation will still be up more than 40% in seven months. What has changed is the buyers’ appetite: Reuters, citing the Financial Times, said Morgan Stanley, which is arranging the round, found client demand soft, and some existing shareholders showed signs of “investor fatigue.” One person familiar with the matter described the round as a “thud.”
Squeezed in ahead of Anthropic’s listing
The timing matters too. Reuters previously reported that OpenAI wants to finish this round before Anthropic’s listing, expected in mid-November, and the two companies’ investor lists overlap heavily. Anthropic made its prospectus public this week, so an older story in the primary market and a new name in the public market are competing for the same buyers in the same month.
The broader backdrop is also cooling. On October 30 the Nasdaq Composite fell 2.9%, 7.8% below its October 6 closing high. Tech stocks including Intel and Google have been hit hard in succession this week, and the market is starting to seriously work out the payback period on the hundreds of billions of dollars in annual AI capital spending by the big tech companies. Pricing in private rounds is hard to keep insulated from that.
How much does $10 billion less matter?
In absolute terms, $10 billion is not large next to the $122 billion OpenAI raised in March. The more sensitive issue is the pricing signal. In February, OpenAI told investors that its compute spending plan through 2030 was about $600 billion, a spending schedule that has to be carried by round after round of fundraising. After two consecutive cuts to the target, if the first close still falls clearly short of $20 billion, the starting point for the next round of negotiations will be pushed lower.
The alternative is that subscriptions opened to high-net-worth individuals go well, the total climbs back to $20 billion, and the valuation holds at the $1.25 trillion level. The report gives no details on when that portion will open or how high the minimum will be, so this cannot be verified for now.
Sources: Financial Times, Reuters, CocoLoop, The Wall Street Journal, CNBC; figures for the funding target, pre-money valuation, first close and commitments to date were cross-checked across the differing accounts.