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 financing includes other venture companies and agreement documents were sent to potential investors in recent weeks, with the aim of closing the round by the end of 2022, the report said.
Microsoft declined to comment, while OpenAI did not immediately respond to Reuters’ request for comment.
This follows a Wall Street Journal report that said OpenAI was in talks to sell existing shares valued at roughly $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 ) Chief Executive Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing on Nov. 30. A chatbot is a program designed to imitate human-like conversations based on user prompts.
The Semafor report said the funding terms included Microsoft getting 75% of OpenAI’s profits until it recoups its original investment once OpenAI figures out how to monetize ChatGPT and other products like the Dall-E imaging tool.
By reaching that threshold, Microsoft would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI’s nonprofit parent getting 2%, the report said, without clarifying what the stake would be before Microsoft got the money back.
Microsoft, which invested $1 billion in OpenAI in 2019, was working on launching a version of the Bing search engine using the AI behind ChatGPT, the information reported last week.
Reporting by Aarati Krishna in Bengaluru; Editing by Savio D’Souza
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