OpenAI raises $11B at a $1.25T valuation

The real headline is that they couldn’t hit what they wanted in terms of valuation and funds raised. Just were not enough people willing to invest given concerns that it may be downhill from here for a while on AI.

This will also make it even harder to avoid any future IPO being a down round. They’re almost certainly worth much less than Anthropic and Anthropic is, per reports, struggling to keep its valuation much above 1T, and even that may fall through.

We always see these headlines and think "is XYZ company actually worth that much?"

Class A stock gets paid out first, so "valuation" here is not what a retail investor would necessarily pay for class C.

Basically, do these people think that they'll get their $11B back? If so, they are ok with a high "valuation" because there is little risk. And with OpenAI's corporate structure, who knows what is actually happening.

Valuation dropped, that's the real news. Altman couldn't raise the amount he wanted to so it's gonna just be a dumping ground in the public markets.

I think OpenAI is one of the most important companies in a generation, but on a tangent, I remember the first time a company broke a $1T market cap, and it was a significant moment. Nowadays multi-trillion-dollar valuations are becoming more common — I wonder how much it reflects inflation vs companies being genuinely bigger than they used to be. If it’s more about inflation, then we can expect to see dozens and hundreds more in the coming decades. Founders: recalibrate your ambition for the new era.

OpenAI, Anthropic, Google, Nvidia, Grok: they can't all be worth $1T (or $1T additional in Google's case) at the same time.

This valuation is a function of early accumulation of compute. They could rent it to Anthropic, or poach more Anthropic engineers.

They wanted to raise 20 billion "from family offices and high net-worth individuals", i.e., fleece the Saudis again but failed:

https://www.wheresyoured.at/running-dry/

They got a bit of pocket change at this insane valuation.

How many companies have a public market valuation over 1T, that seems like a lot

The story here is that Sam wanted to raise a lot more, but could not. Investors almost certainly want to see how the Anthropic IPO plays out before deciding whether to keep showering these companies with money.

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