OpenAI is set to seek only $20 billion from investors in its latest funding round, slashing its target by a third after major tech selloffs, the Financial Times has reported.

Citing multiple sources, the paper said that OpenAI had set a investors a 30 October deadline for the funding round, which is now expected to bring in less than $20 billion after some investors lowered their allocations.

People familiar with the matter told the FT that a consortium of investment groups from the United Arab Emirates, including state-backed tech fund MGX, is expected to be the deal’s largest participant. As part of the deal, OpenAI will have an option to lease newly developed computing power in the region, they added.

Other investors include venture capital funds such as Founders Fund, Coatue, Sequoia Capital, Andreessen Horowitz and SoftBank, the paper reported.

A subsequent retail offering, the second from OpenAI, could allow wealthy individuals to invest in the company at a $1.25 trillion valuation, bringing its total raise to $20 billion, the people added.

Earlier in the month, the FT reported that OpenAI had reduced the valuation it was targeting from $1.4 trillion to $1.25 trillion after low investor appetite, making this the second size reduction of this funding round.

The decision comes amid a mass selloff of tech stocks, with the tech-heavy US index the Nasdaq falling 6.45 per cent in the last month, wiping more than $2 trillion of value from the market.

The fall was triggered in part by investor concerns around the large outlays of capital required to fuel the AI boom and the lack of a clear return on this investment. Google’s stock fell by half a trillion dollars last week following the revelation that its AI search feature was taking away from the advertising revenues that form its primary income.

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