• OpenAI announced in October that it had raised $6.6 billion at a blockbuster valuation of $157 billion.
• Among its new backers was a well-known investor: SoftBank.
• Navneet Govil, CFO of SoftBank’s Vision Fund, told BI why he bet on manufacturer ChatGPT.

Before investing $500 million in OpenAI, SoftBank passed up the opportunity to do so last year for a fraction of the cost.

But the chief financial officer of SoftBank’s Vision Funds, the world’s largest technology investor, says it wasn’t the right time.

“We could have done it in 2023 at a much lower valuation, $30 billion,” Navneet Govil said in an interview with Business Insider.

OpenAI shook the tech world last month by raising $6.6 billion in a valuation of $157 billion in a round that included a $500 million investment from Microsoft, Tiger Global and SoftBank.

However, Govil said SoftBank sees itself as “a growth equity investor focused on mid- to late-stage companies.” Last year, the largely non-profit version of OpenAI was still in the process of determining potential revenue streams – but that has now changed.

From launch ChatGPT As of November 2022, OpenAI has seen rapid growth as its large language model-based application sparked global interest in generative AI.

“When you look at where OpenAI is today, it is more mature, has a stronger revenue base and a clear direction toward converting to a for-profit entity,” Govil said.

According to Govil, OpenAI’s revenue is expected to reach $3.7 billion this year, a figure first reported by the New York Times, and up from around $20 million two years ago.

ChatGPT’s monthly active users have also continued to increase. Vision Fund’s CFO says the number of users now stands at 350 million, more than the numbers of competing companies. The company has also partnered with Apple earlier this year to bring ChatGPT to the iPhone maker’s devices.

OpenAI’s valuation is now surpassed by only a tiny handful of private companies. companies like SpaceX and TikTok parent ByteDance, another SoftBank-backed company.

SoftBank has led huge investments in everything from Uber to controversial companies like WeWork. After suffering heavy losses on high-stakes technology bets placed through its Vision funds, the Japanese conglomerate returned to a Profit of $7.7 billion in earnings released Tuesday.

Investors generally aim to back companies as early as possible to maximize returns.

But SoftBank founder, Masayoshi Son, is a long-time AI obsessive. He dreams of “artificial superintelligence”, met OpenAI boss Sam Altman last year, and is a regular ChatGPT user.

With Son now owning a share of one of the world’s fastest-growing AI companies, OpenAI – and its backers – are faced with the exorbitant capital expenditures of developing LLM.

OpenAI must undertake increasingly expensive training to create smarter AI models that could one day achieve human-level intelligence. Dario Amodei, CEO of OpenAI rival Anthropic, projected future AI training is worth $100 billion.

Govil said “the investments are going to be significant” but considers OpenAI’s partnership with Microsoft and the access it grants them to the Azure cloud platform – key for hosting and training AI models – as the key to cost management.

He also sees opportunities for OpenAI to continue to monetize its offerings, whether it’s increasing the number of paid subscribers to ChatGPT, step up the GPT Store it was unveiled last year, or increasing adoption of OpenAI’s API and development platform.

However, there are other challenges for OpenAI and the broader AI market.

A suggested recent report that OpenAI’s next flagship AI model is struggling to make a significant performance leap over an existing model.

Management issues also surround OpenAI: several high-level executives left the company following a failed attempt to oust CEO Altman last year.

However, SoftBank sees OpenAI progressing. And it has room to invest in other AI companies, Govil said, despite a report last month that OpenAI asked new investors not to bet on rival companies.

“Our view is that if it is a disruptive company and the addressable market is large, there is room for more than one player,” he added.