SoftBank to Invest $500M in OpenAI for the First Time—Is It Late to the Party?

SoftBank is looking to invest in OpenAI for the first time. The Japanese conglomerate helmed by billionaire Masayoshi Son has reportedly agreed to chip in $500 million via its second Vision Fund in a round that values the ChatGPT maker at a staggering $150 billion, The Information reported today (Sept. 30). The round is set to be led by Thrive Capital, which is investing $1 billion. Other participants could include Microsoft (MSFT), Nvidia (NVDA), Tiger Global Management and the United Arab Emirates-backed fund MGX.

SoftBank’s involvement would represent one of Son’s most significant bets on A.I. so far. It would also follow missteps made by the conglomerate’s first Vision Fund, which infamously backed WeWork and suffered heavy losses after its collapse in 2023. Until now, Son’s most notable A.I. investment has been SoftBank’s majority ownership of Arm, a U.K.-based chip designer. SoftBank in May reported a $4.6 billion gain for its Vision Funds for the fiscal year, largely driven by Arm’s 2023 IPO.

In the past few years, the conglomerate has been on “defense mode,” said Son during SoftBank’s 2023 annual shareholder meeting last June. “Three years ago, we didn’t have a lot of cash on hand,” said Son at the time, noting that SoftBank has since amassed more than $35 billion. “We are ready to shift to offense mode,” he declared, adding his primary interest was playing a large role in the “A.I. revolution.”

Besides partaking in an investment round for Perplexity AI, an A.I.-driven search engine, earlier this year, the company has largely taken a backseat to A.I. startups and reportedly passed on investments in OpenAI competitors like Mistral AI, Anthropic and Cohere. Its willingness to back OpenAI, however, should come as no surprise—Son has repeatedly sung the praises of the company, stating that he is a “heavy user of ChatGPT” and calling OpenAI CEO Sam Altman “one of the key people on Earth.” SoftBank and OpenAI did not respond to requests for comment from Observer regarding SoftBank’s investment.

Is SoftBank late to the A.I. party?

SoftBank’s bet on OpenAI is quite late by venture capital standards, given its already colossal valuation. But the high-flying A.I. company still has room for growth, according to analysts. The company hit $3.4 billion in annualized revenue in June and is “progressing towards $5 billion in annual recurring revenue, driven primarily by its ChatGPT product,” Brendan Burke, PitchBook’s senior emerging technology analyst, told Observer via email.

PitchBook estimates OpenAI is set to benefit from a generative A.I. software market that is on pace to double next year and exceed $30 billion, he added. “This revenue growth supports further valuation growth, which encourages employees to remain at the company and progresses toward the trillion-dollar valuation that CEO Sam Altman believed the company can grow into,” said Burke.

SoftBank’s investment comes at a time of uncertainty for OpenAI. The company last week lost three top executives, and Altman is reportedly planning a restructuring that will change the company’s capped-profit model. “Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding,” said Altman in a post on X announcing the recent departures.