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Morrison Foerster (MoFo) was called in to advise Japanese tech investor SoftBank as lead investor in an up to $40bn funding round in ChatGPT-owner OpenAI.
MoFo said the financing round is the largest investment by a venture-backed start-up on record, with the deal valuing OpenAI at $300bn. Up to $10bn of the investment is expected to be syndicated to other investors, with SoftBank covering the rest.
MoFo’s global deal team was led by Tokyo office managing partner and head of the Tokyo M&A team Ken Siegel, alongside the firm’s chairman Eric McCrath and Chris McKinnon (both San Francisco corporate partners). The global deal team included corporate partner Joe Sulzbach in New York with support from associates in the firm’s New York, Bay Area and Tokyo offices.
OpenAI said the investment will enable it “to push the frontiers of AI research even further, scale our compute infrastructure and deliver increasingly powerful tools for the 500 million people who use ChatGPT every week”.
The first $10bn tranche of the investment is expected to be delivered by the middle of this month, with up to $30bn due in December.
SoftBank has invested $2.2bn in OpenAI through its SoftBank Vision Fund 2 since last September, which MoFo also advised on. SoftBank said it is betting on OpenAI to achieve artificial general intelligence, which it says is a stepping-stone to artificial super intelligence. In January, SoftBank and OpenAI announced the ‘Stargate Project’, a plan to build dedicated AI infrastructure in the US.
OpenAI has been subject to a number of lawsuits over alleged copyright infringement. In December, Canadian media companies including the Toronto Star, the Globe and the Canadian Broadcasting Corporation, said they were suing OpenAI for allegedly taking large swaths of their work “indiscriminately and without regard for copyright protection” to train its GPT models.
Earlier last year, OpenAI scored a partial win in similar a dispute with a group of authors including writer and performer Sarah Silverman after a judge in the Northern District of California struck down five claims brought against the AI developer, although part of the claim related to unfair competition was allowed to proceed.
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