OpenAI is allowing employees to sell about $1.5 billion worth of stock in a new tender offer to SoftBank, CNBC has learned.
The new funding will allow the Japanese tech conglomerate to obtain an even larger stake in the AI startup and will allow current and former OpenAI employees to cash out their shares, two people familiar with the matter told CNBC.
Employees will have until Dec. 24 to decide whether they want to participate in the new takeover bid, which has not been previously reported, one of the sources said. The deal was driven by SoftBank’s billionaire founder and CEO Masayoshi Son, who was persistent in pushing for a larger stake in the startup after investing $500 million in OpenAI’s latest funding round, the company said. one of the sources.
Tender offer is not related to OpenAI’s potential plans to restructure the company to a for-profit businessone of the people said.
OpenAI and SoftBank declined to comment.
The deal, which according to sources familiar with the matter was made through SoftBank’s Vision 2 fund, highlights Son’s interest in the AI field and in supporting the most valuable private players. SoftBank was an early investor in semiconductor company Arm, and Son said at a conference in October, he said he was saving “tens of billions of dollars” to achieve the “next big leap” in artificial intelligence. He has 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.
The OpenAI investment fits SoftBank’s desire to deploy liquidity, with a capital-intensive business model, a person close to Son told CNBC.
Even without SoftBank’s deep pockets, OpenAI had no trouble raising billions in liquidity. Its valuation has soared to $157 billion in the two years since ChatGPT launched. OpenAI has raised around $13 billion from Microsoftand that closed its latest $6.6 billion funding round in Octoberled by Thrive Capital and including participation from the chipmaker NvidiaSoftBank and others.
The company also received a $4 billion revolving line of creditbringing its total liquidity to more than $10 billion. OpenAI expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC confirmed in September with a person familiar with the matter.
OpenAI employees can cash out
The tender offer will be open to current and former employees who were granted restricted stock at least two years ago and who have held the stock for at least that period, one of the sources said. The unit price of $210 will align with the company’s latest funding round.
Tender deals have become crucial for tech employees amid a dormant IPO market and skyrocketing company valuations. Private companies rely on such agreements to keep their employees happy and reduce pressure to enter public markets. Since OpenAI has no initial public offering on the horizon and its price makes the company prohibitive to potential buyers, secondary stock sales are the only way for shareholders to pocket a portion of their paper wealth in the near future.
Databricks is another private company raising money to allow employees to cash out and avoid public market pressure, CNBC reported Tuesday.
OpenAI has taken a more restrictive approach to tender offers in the past, with rules allowing the company to determine who can participate in stock sales, CNBC reported in June. Current and former OpenAI employees previously told CNBC that there was growing concern over access to cash following reports that the company had the power to recoup acquired equity.
But the company abandoned its secondary stock sale policy in June and now allows current and former employees to participate equally in annual tender offers.
The company hopes to allow more of these secondary sales and will need to tap private markets again in the future depending on investor demand and the capital-intensive nature of the business, according to a person close to it. of the new public purchase offer.
OpenAI faces growing competition from startups like Anthropic and tech giants like Google. The generative AI market is expected to exceed $1 trillion revenue within ten years and business spending on generative AI jumped 500% this yearaccording to recent data from Menlo Ventures.
In October, OpenAI launched a search function within ChatGPT, its viral chatbot, which positions the high-powered AI startup to better compete with search engines such as GoogleMicrosoft Bing and Perplexity.
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