Why does OpenAI need so much money?

Building a chatbot like ChatGPT requires billions of dollars, and costs are escalating

SAN FRANCISCO - In early 2023, OpenAI raised US$10 billion (S$13.5 billion). Just 18 months later, the company had burned through most of that money. So it raised US$6.6 billion more and arranged to borrow an additional US$4 billion.

But in another 18 months or so from now, OpenAI will need another cash infusion because the San Francisco start-up is spending more than US$5.4 billion a year. And by 2029, OpenAI expects to spend US$37.5 billion a year.

OpenAI's accelerating expenses are the main reason the corporate structure of the company, which began as a non-profit research lab, could soon change.

OpenAI must raise billions of additional dollars in the years to come, and its executives believe it will be more attractive to investors as a for-profit company.

In many ways, artificial intelligence (AI) has inverted how computer technology used to be created. For decades, Silicon Valley engineers designed new technologies one small step at a time.

As they built social media apps like Facebook or shopping sites like Amazon, they wrote line after line of computer code. With each new line, they carefully defined what the app would do.

But when companies build AI systems, they go big first: They feed these systems enormous amounts of data. The more data companies feed into these systems, the more powerful they become.