Is OpenAI’s $6.6 billion funding round a smart bet on AI or a risky bubble waiting to burst?

OpenAI is viewed as one of the most important startups in Silicon Valley. It now has a price tag to match.

The high-profile startup announced the closing of a $6.6 billion funding round that valued it at $157 billion. It marks the largest VC round of all time and makes OpenAI one of the most valuable startups in the world, alongside Elon Musk’s SpaceX and ByteDance, TikTok’s parent company.

So, who invested?

Josh Kushner’s Thrive Capital is leading the round. Repeat investors include Cathy Wood’s Ark Venture Fund, Chase Coleman’s Tiger Global, and OG OpenAI backer Microsoft. New faces include chip giant Nvidia and Masayoshi Son’s SoftBank. Here’s a complete rundown of the backers.

The big news comes amid wider turmoil at the startup. Last week, Chief Technology Officer Mira Murati became the latest executive to depart the firm. That was coupled with news of OpenAI’s plans to become a for-profit corporation.

(OpenAI exec Kevin Weil told Business Insider’s Rob Price the startup still has a “great bench,” so there’s that.)

In the meantime, OpenAI’s rivals like Anthropic and Perplexity are pitching themselves as being about mission over profits. And more exits could be coming since OpenAI is reportedly working on allowing its employees to sell their shares in the company.

It’s important to remember OpenAI’s eye-popping valuation is just that … a valuation.

Silicon Valley has a long list of high-flying startups that raised money on massive valuations that have proved difficult to maintain.

Take the fintech Stripe, which was valued at almost $100 billion at its height in 2021 only to see its valuation get cut down amid a downturn in the industry. Even as it claws its way back, one of its backers has reportedly offered to buy its own investors’ shares in the startup who want liquidity.

Which gets us back to $157 billion OpenAI. At that size, and with the current regulatory environment around AI and Big Tech, an acquisition is almost certainly out of the question. That leaves the public markets, another daunting task.

If OpenAI were to IPO tomorrow at that value, it would be the second-largest American IPO by initial valuation, trailing only Alibaba, which went public in September 2014 at a $169.4 billion price tag.

“I hope and expect that the next step for OpenAI would be to go public,” Altimeter Capital’s Brad Gerstner, who is an OpenAI investor, said at a conference Wednesday.

But even if the IPO market can shake its current drought, questions remain if AI is just a bubble waiting to pop. At the very least, turning a profit from the tech, which is costly to build and maintain, is proving difficult for just about everyone. OpenAI will reportedly lose as much as $5 billion this year.

On the other hand, if OpenAI can maintain its position as the go-to AI app, and the wider industry is as transformational as some believe it is, getting in at a $157 billion valuation might be a bargain.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Hallam Bullock, senior editor, in London. Jordan Parker Erb, editor, in New York. Milan Sehmbi, fellow, in London. Amanda Yen, fellow, in New York.