OpenAI has authorized employees to sell approximately $1.5 billion worth of stock to SoftBank in a new tender offer, CNBC reported.
The new funding will allow the Japanese tech conglomerate to acquire an even larger stake in the AI ​​startup, and will allow current and former OpenAI employees to cash out their shares, the sources said. Two people familiar with the matter told CNBC.
Employees have until Dec. 24 to decide whether to participate in a new tender offer, one of the people said, which had not been previously reported. The deal comes after SoftBank billionaire founder and CEO Masayoshi Son invested $500 million in OpenAI’s previous funding round, one of the people said. It is said that this was facilitated by the company’s insistence on increasing investment in the company.
The tender offer is unrelated to OpenAI’s potential plans to restructure the company into a for-profit business, one of the people said.
OpenAI and SoftBank declined to comment.
The deal, made through SoftBank’s Vision 2 Fund, confirms Son’s interest in supporting the AI ​​sector and the most valuable private companies, the people said. SoftBank is an early investor in semiconductor company Arm, and Son said at a press conference in October that it was saving “tens of billions of dollars” for the “next big thing” in artificial intelligence. He previously invested in Apple, Qualcomm, and Alibaba.
SoftBank’s Vision Fund 2 recently invested in AI startups Glean, Perplexity, and Poolside. SoftBank has approximately 470 portfolio companies and $160 billion in assets across its two Vision Funds.
A person close to Son told CNBC that the investment in OpenAI is consistent with SoftBank’s eagerness to inject cash into its capital-intensive business model.
Even without SoftBank’s deep pockets, OpenAI had no trouble raising billions of dollars in cash. In the two years since ChatGPT launched, its valuation has risen to $157 billion. OpenAI raised about $13 billion microsoftIn October, it closed its latest round of $6.6 billion led by Thrive Capital with participation from chipmaker Nvidia and SoftBank.
The company also received a $4 billion revolving credit facility, bringing its total liquidity to more than $10 billion. OpenAI expects to lose about $5 billion this year on revenue of $3.7 billion, CNBC confirmed to people familiar with the situation in September.
OpenAI employees can withdraw cash
The tender offer is open to current and former employees who were granted restricted stock units at least two years ago and have held the stock for at least that period, one of the people said. The unit price of $210 is in line with the company’s latest funding round.
With the IPO market dormant and company valuations soaring, tender offers have become crucial for technology employees. Private companies rely on such deals to increase employee satisfaction and reduce the pressure of public market listings. Since OpenAI does not have an IPO on the horizon, and the company’s price is prohibitive for would-be acquirers, the only way in the near term for shareholders to get a piece of the paper is secondary This is a stock sale.
Databricks is another private company raising money to help employees shell out cash and avoid public market pressures, CNBC reported Tuesday.
CNBC reported in June that OpenAI has taken a more restrictive approach to tender offers in the past, with rules allowing the company to decide who participates in stock sales. Current and former OpenAI employees previously told CNBC that concerns about access to liquidity were heightened following reports that the company had the power to take back vested interests.
However, in June, the company changed its policy regarding secondary stock sales and now allows current and former employees to participate equally in the annual tender offer.
The company plans to allow more such secondary sales and may revisit private markets in the future based on investor demand and the capital-intensive nature of its business, according to people familiar with the new tender offer. It is necessary to do so.
OpenAI faces increasing competition from startups like Anthropic and tech giants like Google. The generative AI market is expected to exceed $1 trillion in revenue within 10 years, and corporate spending on generative AI has surged 500% this year, according to recent data from Menlo Ventures.
In October, OpenAI introduced search functionality within its viral chatbot ChatGPT, putting high-performing AI startups in a better position to compete with search engines such as: googleMicrosoft’s Bing and Perplexity.
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