Jan 9 (Reuters) – Microsoft Corp (MSFT.O) is in talks to invest $10 billion in OpenAI, the owner of ChatGPT, which would value the San Francisco-based firm at $29 billion, Semafor reported on Monday, citing people familiar with the matter.
The funding includes other venture firms and deal documents were sent to potential investors in recent weeks, with the aim of closing the round by the end of 2022. the report says.
Microsoft declined to comment while OpenAI did not immediately respond to Reuters’ request for comment.
This follows a Wall Street Journal report it said OpenAI is in talks to sell existing shares at a valuation of about $29 billion, with venture capital firms such as Thrive Capital and Founders Fund buying shares from existing shareholders.
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 a human conversation based on user instructions.
The Semafor report said the terms of the funding include Microsoft receiving 75% of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to monetize ChatGPT and other products like the imaging tool Dall- E.
Upon reaching that threshold, Microsoft will have a 49 percent stake in OpenAI, with other investors taking another 49 percent and OpenAI’s nonprofit parent organization getting 2 percent, the report said, without specifying what be the share until Microsoft gets its money back.
Microsoft, which invested $1 billion in OpenAI in 2019, is working to launch a version of its Bing search engine using the AI behind ChatGPT. Information is reported last week.
Reporting by Arathi Krishna in Bengaluru; Editing by Savio D’Souza
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