OpenAI Reportedly Cuts Its Round Target to $20B. Get Its Discounts in Writing
OpenAI has cut its pre-IPO round target to about $20 billion and secured about $11 billion, the FT and WSJ report. Buyers should ask how long its discounts last.
TL;DR
- The FT and WSJ report OpenAI secured about $11 billion of a $30 billion round, cutting the target to $20 billion.
- Investors ultimately fund OpenAI's switching discounts, so a discount with no written renewal price is a first-year promotion.
- Buyers signing multi-year AI deals should get renewal price caps, overage terms and an exit clause before OpenAI goes public.
OpenAI has secured about $11 billion toward a pre-IPO round that was meant to raise $30 billion, The Wall Street Journal reported at the end of October. The Financial Times reported that OpenAI cut the target to about $20 billion. A first close is expected below that, with UAE investors leading it, according to TechCrunch's summary of both reports. A later offering to wealthy individuals could bring the total to that $20 billion target. The WSJ described the response from some large investors as tepid. CNBC confirmed the lower target on October 31, and a person familiar with the deal told CNBC the round hasn't closed. The valuation in the WSJ account is about $1.25 trillion, short of the $1.4 trillion OpenAI was after. OpenAI didn't respond to CNBC's request for comment.
OpenAI has also spent the past few weeks cutting prices. As we covered when OpenAI started giving big discounts to win Anthropic's top accounts, The Information reported deals large enough to move whole workloads. Two days later, OpenAI added GPT-6.1 Terra to its API price list at $1 per million input tokens and $5 per million output tokens. GPT-5.6 Terra costs $2 and $12. Investors ultimately pay for those discounts. A round that has reportedly landed about $11 billion of $30 billion suggests they're less patient than the discounts imply. For a buyer, a deep switching discount with no written renewal price, overage terms or exit clause is a first-year promotion.
A smaller round can keep the discounts coming or shut them off
The money isn't running out. OpenAI still has plenty of cash. It closed $122 billion in March, and CFO Sarah Friar told CNBC in early October that the company is still "very well capitalized." Friar also wrote on LinkedIn that OpenAI ended September at an annualized run rate of about $50 billion, up 77% in three months. Its B2B run rate rose 107%. So the shortfall points to pressure from investors on price.
That pressure can cut either way. A company heading toward an IPO wants revenue growth on the chart, which argues for more discounts that buy share now. Investors who balked at the price want margin, and that argues for smaller discounts at renewal. (No source ties the round to the discounts. This is our reasoning about how the two meet.) The Decoder notes OpenAI "has been pushing hard with price cuts" to hold share against Anthropic. Both forces can work at once, with generous terms this year and firmer ones after the IPO, once OpenAI is reporting margins.
Keep the sourcing in mind. The round figures come from unnamed sources cited by the FT and the WSJ, and OpenAI hasn't confirmed them. The revenue and growth numbers are OpenAI's own and unaudited. The account discounts come from The Information's reporting on specific deals.
None of this reporting says what happens to the discounts after the IPO, and OpenAI hasn't said either. That's why the duration belongs in the contract. A discount with no stated end date is one the vendor can drop at the first renewal.
What this means for buyers signing multi-year AI contracts
Ask one question about your own deal. Is the discount priced for year one or for the life of the contract? If the answer isn't on paper, assume it's year one.
Get the renewal price in writing before you sign. If the offer takes a large cut off list, ask for the year-two and year-three prices as numbers, along with a cap on any increase at renewal. Our earlier piece asked the same about the discount's duration. The reported shortfall makes that ask more pressing.
Put usage caps and overage rates in the same document. A discount on the committed amount means little if usage above it bills at list. Ask what happens to your rate when the model you signed for is replaced, and how much notice you'll get.
Write the exit before you write the commitment. Pair any multi-year commit with a step-down right and a termination clause that applies if the price rises above your cap.
If you own the AI budget, plan the 2027 renewal at list price and show the gap from your discounted rate as its own line.
If your renewal or a switching offer lands before OpenAI goes public, negotiate these terms then. Until it lists, the company still wants revenue on its chart more than margin.
For a buyer, a deep switching discount with no written renewal price, overage terms or exit clause is a first-year promotion.
Before you sign any multi-year AI contract, get the year-two and year-three prices, the overage rate and a termination right written into the document.
