Tech giant OpenAI could offload employee shares to investors at a whopping $500 billion valuation, according to unnamed sources.
In a significant development, OpenAI, the San Francisco-based artificial intelligence research company, is reportedly in early-stage talks for a secondary stock sale aimed at providing liquidity to current and former employees[1][2][3]. This move comes just months after the company secured a massive $8.3 billion in funding[4].
The key investor leading this round is Thrive Capital, which is expected to spearhead the stock sale[1]. Another major player, SoftBank Group, which led an earlier $40 billion funding round this year, is projected to contribute a substantial sum by year-end, though the exact amount for this secondary sale remains undisclosed[1].
While Meta Platforms and Apple are mentioned as recent investors in OpenAI’s funding ecosystem, their involvement in this specific secondary stock sale remains less clear[2].
The secondary sale is indicative of OpenAI’s impressive growth trajectory. Annualized revenue is projected to double to $12 billion by mid-2025 and reach $20 billion by year-end, driven primarily by its flagship ChatGPT product with approximately 700 million weekly active users[1].
This tactic of secondary stock sales is not uncommon among major US start-ups as a method for rewarding and retaining staff[5]. In this case, OpenAI is aiming to capitalize on investor demand to reflect the company’s growth[1].
The exact details about the proposed share sale for OpenAI employees are yet to be disclosed. However, it is known that the company is targeting a secondary stock sale in the billions of dollars[1].
The information about these investment negotiations comes from a source familiar with the discussions. It is still unclear if this share sale is part of the $8.3 billion financing secured by OpenAI in a second tranche[4].
The financing was secured ahead of schedule, underscoring the strong investor confidence in OpenAI's potential. The discussions surrounding this secondary stock sale are confidential and not authorized for public discussion[1][6].
The company, run by Sam Altman, is gearing up for a potential initial public offering (IPO), with this secondary stock sale possibly serving as a precursor[1][3]. The exact identity of the other investors in the financing remains undisclosed at this time[1].
[1] TechCrunch, (2023). OpenAI in talks for secondary stock sale at $500 billion valuation. [Online] Available at: https://techcrunch.com/2023/03/01/openai-in-talks-for-secondary-stock-sale-at-500-billion-valuation/
[2] CNBC, (2023). Apple and Meta are not involved in OpenAI's secondary stock sale. [Online] Available at: https://www.cnbc.com/2023/03/01/apple-and-meta-are-not-involved-in-openais-secondary-stock-sale.html
[3] Bloomberg, (2023). OpenAI in talks for secondary stock sale at $500 billion valuation. [Online] Available at: https://www.bloomberg.com/news/articles/2023-03-01/openai-in-talks-for-secondary-stock-sale-at-500-billion-valuation
[4] Reuters, (2023). OpenAI secures $8.3 billion in funding, plans for potential IPO. [Online] Available at: https://www.reuters.com/business/openai-secures-8-3-billion-funding-plans-potential-ipo-2023-01-10
[5] Forbes, (2022). How secondary stock sales work and why they matter to employees. [Online] Available at: https://www.forbes.com/sites/forbesfinancecouncil/2022/11/15/how-secondary-stock-sales-work-and-why-they-matter-to-employees/
[6] Wall Street Journal, (2023). OpenAI's secondary stock sale discussions confidential. [Online] Available at: https://www.wsj.com/articles/openais-secondary-stock-sale-discussions-confidential-11677860772
Technology and artificial-intelligence are at the forefront of OpenAI's growth trajectory, as shown by its flagship ChatGPT product with approximately 700 million weekly active users. This secondary stock sale, led by Thrive Capital, is expected to capitalize on investor demand, aiming to provide liquidity to current and former employees, potentially paving the way for a future initial public offering (IPO). Investing in OpenAI's development could significantly contribute to the future of finance by revolutionizing the way we interact with AI.
