Microsoft Corp is planning to invest $10 billion into OpenAI, the owner of ChatGPT, which will value the firm at $29 billion, Semafor reported on Monday.
Several venture capital firms are also contributing to the round, and deal documents were sent to investors last week. The deal is expected to close at the end of 2023, according to the report.
Microsoft declined to comment, while OpenAI did not immediately respond to Reuters’ request for comment.
This is coming after Wall Street Journal reported that OpenAI was in talks to sell existing shares at a roughly $29 billion valuation, with venture capital firms such as Thrive Capital and Founders Fund buying shares from existing shareholders.
OpenAI, founded by Tesla 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-like conversations based on user prompts.
In the Semafor report, Microsoft will receive 75 percent of OpenAI’s profits until it recoups its initial investment once OpenAI starts making money from ChatGPT and other products such as Dall-E, an image creation tool.
After hitting that threshold, Microsoft would own 49 percent of OpenAI, while other investors would hold 49 percent and OpenAI’s nonprofit parent would hold 2 percent, the report said, without specifying what those stakes would be after Microsoft recoup its initial investment.