OpenAI has closed another investor deal and probably made a lot of new millionaires.
According to the New York Times, OpenAI is now valued at a minimum of $80 billion. The newspaper, which is suing OpenAI for possible copyright infringement, cites several sources familiar with the matter.
The transaction is a so-called "tender offer" led by venture capital firm Thrive Capital, in which employees can sell their shares to the venture capital firm or another investor at a fixed price instead of raising money for the company through another round of financing.
Last year, OpenAI was valued at approximately $29 billion in a similar transaction. This represents a tripling of value in about a year, with an annualized revenue stream of about two billion us dollars, resulting in a market cap of an impressive 40 times annual earnings. OpenAI and Thrive Capital declined to comment on the new deal.
OpenAI employees get rich
The purpose of the tender offer is to provide cash to employees who would otherwise have no easy way to sell their shares, especially if the company is not publicly traded.
The process is usually time-limited and participation is voluntary for employees. Such an offer can be made for various reasons; in this case, OpenAI is likely using it to allow employees to benefit from the increase in value of their shares.
In the booming AI market, the race for the best talent is on, and high returns are still the best argument for attracting and retaining employees. OpenAI reportedly offered leading AI researchers at Google annual compensation packages worth five to ten million dollars, mostly in the form of stock.
In addition, OpenAI could set the stage for diversification by targeting the AI chip and consumer hardware businesses. The potential expansion into new businesses shows the ambition of OpenAI, and especially CEO Sam Altman, to fully occupy the AI value chain.
