Sam Altman, CEO of OpenAI, is seen by some as the next Steve Jobs or Bill Gates
Sam Altman, CEO of OpenAI, is seen by some as the next Steve Jobs or Bill Gates AFP

ChatGPT-maker OpenAI has become an AI powerhouse after securing Silicon Valley's largest-ever funding round. The company now faces the challenge of delivering on its promise to become the next Apple or Google.

OpenAI raised $6.6 billion in cash and secured a $4 billion credit line, catapulting the company to a staggering $157 billion valuation.

There is no question that the investment round spearheaded by CEO Sam Altman and his newly hired CFO Sarah Friar made for a rude awakening for OpenAI rivals Google, Meta, xAI and Amazon-partnered Anthropic.

Despite controversy, investors put down unheard of numbers with only a foggy sense of when they will get a return from a company that was unknown to the general public two years ago.

Close partner Microsoft is again in on the deal, after its investment of $13 billion in 2023. New investors include Tokyo-based conglomerate SoftBank and AI chip maker Nvidia.

Others include MGX, a United Arab Emirates state-backed fund created to invest in AI.

OpenAI needs the money to pay for the immense running costs of building generative AI from the bottom up.

Delivering the powers of ChatGPT requires industrial-level computing power, and hefty pay packages for the world's most sought after researchers.

OpenAI's cash-burn rate is already enormous. According to US media, this year the company is on track to lose $5 billion on revenue of $3.7 billion. It is projecting revenue will grow to $11.6 billion in 2025 and exponentially from there.

"What drives this technology? It's compute first, and it's not cheap. It's great talent second," OpenAI CFO Friar told CNBC on Thursday.

"We're going to have to really be careful and smart about how we raise money."

OpenAI is a strange company by any normal business standards.

The company was founded in 2015 by Elon Musk, Altman and others mainly out of fear that Google would get too far ahead in the nascent field, which they felt endangered humanity.

To show their altruism, the anti-Google technologists launched OpenAI as a non-profit. Musk, who left the project in 2018, got things off the ground with a $50 million donation.

As advances were made, Altman persevered and switched the company to a "capped profit" status that allowed for a limited level of money making.

But OpenAI was still controlled by a board made up largely of AI researchers and academics that believed they were saving the world from the dangers of AI.

Meanwhile at the company, pushed by Altman, staff raced to develop the world's most powerful generative AI and getting it to users.

The schizophrenic set-up imploded spectacularly last November, when the board fired Altman out-of-the-blue.

Within hours, OpenAI staff rebelled and, with Microsoft working in the background, Altman was reinstated.

Those involved in Altman's ouster, including almost all of the company's original founders, have since left the company.

Alarmed by the chaos, the new investors have demanded that OpenAI become a more classic "for-profit" outfit within two years.

Admitting the change, CFO Friar said "we want to be a more traditional company. Why make things complicated that don't need to be complicated."

Since the release of ChatGPT, Altman has been celebrated as the next Steve Jobs or Bill Gates, visionary tech leaders who were ruthless in business.

The star-power drew the investors who want to reward Altman with equity in OpenAI and guarantee his commitment to the company's future.

A share of just a few percentage points would turn Altman into a multi-billionaire, but also rankle critics who have questioned his incentives.

Friar said that talks were ongoing on how to give Altman skin in the game, but insisted that "nothing has been set in stone right now."