Microsoft in talks to invest $10 billion in ChatGPT owner -Semafor

Jan 9 (Reuters) – Microsoft Corp (MSFT.O) is in talks to invest $10 billion in OpenAI, the owner of ChatGPT, which will value the San Francisco-based company at $29 billion, Semafor reported on Monday, citing people familiar with the matter.

The funding includes other venture capitalists and deal documents have been sent to potential investors in recent weeks, with the aim of closing the round by the end of 2022, according to the report.

Microsoft declined to comment, while OpenAI did not immediately respond to Reuters’ request for comment.

This follows a Wall Street Journal report that OpenAI was in talks to sell existing shares at a valuation of around $29 billion, with venture capital firms such as Thrive Capital and Founders Fund buying shares from shareholders. existing.

OpenAI, founded by Tesla Inc (TSLA.O) CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing on November 30. A chatbot is a software application designed to mimic human conversation based on user prompts. .

Semafor report says funding terms included Microsoft getting 75% of OpenAI’s earnings until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products like the Dall-E imaging tool.

Upon reaching that threshold, Microsoft would own a 49% stake in OpenAI, with other investors taking an additional 49% and OpenAI’s nonprofit parent company getting 2%, according to the report, without specifying what the stakes would be until what Microsoft gets its money back.

Microsoft, which invested $1 billion in OpenAI in 2019, was working to launch a version of its Bing search engine using the AI ​​behind ChatGPT, the news reported last week.

Reporting by Aarati Krishna in Bengaluru; Editing by Savio D’Souza

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