OpenAI slashes fundraising target to $20 billion after securing only $11 billion

What happened

OpenAI has reduced its target for the current funding round by roughly a third, from $30 billion to $20 billion, according to multiple concurrent reports on October 31. The Financial Times first reported the cut, CNBC confirmed it citing a person directly familiar with the deal, and the Wall Street Journal added that the company has secured about $11 billion so far.

The round remains open, and final figures could change. The company's desired post-money valuation has also dropped from $1.4 trillion to $1.25 trillion. OpenAI set a Friday deadline for investors to commit, and some large investors responded by reducing their planned allocations.

Who is investing

A consortium of UAE investors that includes state-backed technology fund MGX is expected to be the largest participant in the round, according to the Financial Times. As part of the deal, OpenAI would gain the option to lease newly developed computing capacity in the region.

Venture capital firms Founders Fund, Coatue, Sequoia Capital, and Andreessen Horowitz are also expected to participate. The company plans to turn to family offices and high-net-worth individuals in the coming weeks to reach the $20 billion target, with a subsequent retail offering at the same valuation.

Why the cut matters

The reduced target is the clearest signal yet that even the world's leading AI lab faces a more skeptical fundraising environment. OpenAI has been the best-capitalized AI company in the world, with Microsoft alone investing over $13 billion, but the current round's tepid reception suggests investors are beginning to ask harder questions about AI profitability.

The cut lands in the middle of a sharp AI-led tech selloff. The Nasdaq fell 2.9% on October 31 and is down 7.8% from its October record close, according to Reuters. OpenAI had been racing to lock in commitments before rival Anthropic, which has filed for a Nasdaq IPO and is expected to list in mid-November, starts competing for the same pool of investors.

The competitive context

OpenAI's fundraising challenges come as its main rival, Anthropic, is preparing for what could be the largest IPO in history. Anthropic filed its S-1 on October 26 and is reportedly targeting a valuation of $1.5 trillion to $2 trillion. The company has shown breakneck revenue growth and turned cash flow positive in the first half of 2026, according to its filing.

The contrast between OpenAI's struggling fundraise and Anthropic's IPO ambitions highlights a divergence in investor sentiment toward the two leading AI labs. Both companies face enormous compute costs: Anthropic disclosed in its S-1 that it could potentially spend $750 billion in the coming years on computing capacity.

What the numbers mean for OpenAI's plans

The reduced fundraising comes ahead of OpenAI's planned IPO, which the company previously indicated would come in 2027. The current round was intended as a bridge to that public offering. The lower amount raised means OpenAI will have less capital than it had planned for compute capacity, talent acquisition, and expansion.

OpenAI's operating costs are enormous. The company has been spending billions on compute and inference as it launched GPT-6 Astra, GPT-Rosalind-6, and expanded ChatGPT's capabilities. The company recently announced it would begin charging for API features that were previously free, and it is merging ChatGPT and Codex usage allowances to better monetize its existing subscriber base.

The broader AI funding picture

OpenAI's reduced round is not an isolated event. The broader AI sector is experiencing a funding pullback as investors reassess the timeline for AI profitability. DeepSeek raised approximately $15.8 billion in a second round led by Tencent and CATL. Cohere raised up to $7 billion in Canada's largest startup round, but with a $1.6 billion equity stake from the Canadian government.

The message from investors is consistent across the sector: they want to see revenue models that justify the enormous capital being deployed. OpenAI reported $3.7 billion in annualized revenue in early 2026, growing to an estimated $10 billion by fall. But even that growth has not been enough to convince every investor that the company's valuation premium is justified, especially with Anthropic — which has shown stronger financial discipline — preparing to go public.

Caveats

The figures in this article are based on media reports, not official announcements from OpenAI. The company has not confirmed the funding target, the amount raised, or the valuation. All numbers come from CNBC, the Financial Times, the Wall Street Journal, and TechCrunch, citing people familiar with the deal. The round remains open, so final terms could differ.