OpenAI Secures $10B in One Week—But It’s Also Burning Cash at Record Speed

Fresh off a giant funding round that valued OpenAI at $157 billion, the ChatGPT maker has secured even more financial backing through a credit facility with a trove of financial institutions, many of which are also its clients. The Sam Altman-led company announced yesterday (Oct. 3) that it has set up a $4 billion credit line from the likes of JPMorgan Chase (JPM), Citi, Goldman Sachs (GS), Morgan Stanley (MS), Santander, Wells Fargo (WFC), SMBC, UBS and HSBC.

“We are proud to have the strongest banks and investors in the world supporting us,” said Sarah Friar, OpenAI’s chief financial officer, in a statement. “This credit facility further strengthens our balance sheet and provides flexibility to seize future growth opportunities.”

The arrangement of the credit line also includes the ability to increase it by $2 billion, according to CNBC. Combined with OpenAI’s recent $6.6 billion in funding, OpenAI now has access to more than $10 billion in liquidity and “the flexibility to invest in new initiatives and operate with full agility as we scale,” said OpenAI in a press release.

OpenAI is now flush with cash, but it’s also burning money at an alarming rate. Despite skyrocketing revenue (annual revenue is expected to triple from this year’s $3.7 billion to $11.6 billion next year), the company is on track to lose $5 billion this year. The most significant costs come from its use of Microsoft (MSFT)’s cloud computing platform to run its products.

Banks are embracing generative A.I.

OpenAI’s arrangement with nine major financial institutions also signifies growing ties between banks and generative A.I. Despite the fact that 30 percent of banks around the globe banned the use of A.I. internally as of March, financial institutions have gradually begun to embrace the new technology. Goldman Sachs, for example, which banned the use of ChatGPT last year, has since begun experimenting with A.I. tools that can aid developers and help summarize and draft documents.

Some of the banks involved in OpenAI’s credit line are clients of the ChatGPT-maker itself. The credit facility “reaffirms our partnership with an exceptional group of financial institutions, many of whom are also OpenAI customers,” said the A.I. company. Santander has previously revealed that it is testing out uses of ChatGPT, while Morgan Stanley in June rolled out a new A.I. assistant powered by OpenAI’s GPT-4 model to help nearly 16,000 financial advisors take notes in client meetings and draft emails. JPMorgan Chase, too, has used OpenAI’s products, having introduced an A.I. assistant in August with the help of an OpenAI model in a bid to enhance the productivity of more than 60,000 employee.