OpenAI aims to boost fundraising before Anthropic’s upcoming IPO

OpenAI is striving to finalise investor commitments ahead of the anticipated public market entry of competitor Anthropic in mid-November. This rapid fundraising effort could potentially assign a valuation exceeding $1.4 trillion to the creator of ChatGPT, as indicated by sources. The accelerated schedule indicates, in part, a strategic move to outpace Anthropic, as both leading laboratories are increasingly drawing from a similar pool of investors. Sources suggest that OpenAI aims to leverage its recent revenue expansion following the introduction of new models. SoftBank Group, along with Abu Dhabi-based MGX and other current investors in OpenAI, is engaged in discussions to participate in a funding round estimated at approximately $30 billion, according to one source. The acceleration highlights the intense competition between the two AI developers for capital as they both aim for trillion-dollar valuations, in the context of increasing concerns regarding rising interest rates, notable volatility in technology stocks, and heightened scrutiny of AI valuations. OpenAI conducted discussions with long-only funds and sovereign wealth funds last week, coinciding with Anthropic’s investor day events. OpenAI’s funding round is anticipated to progress more swiftly than what is customary for an offering of its magnitude, according to sources.

Investors acquainted with the company indicate that OpenAI requires capital to support its significant infrastructure obligations and strengthen its balance sheet, particularly if a decline in the IPO markets postpones its anticipated 2027 listing. Despite the robust demand for the shares of both companies, investors encounter the difficulty of assessing and distributing capital between two intricate, rival offerings in a matter of days or weeks. Some investors perceive OpenAI’s financing initiative as a strategy to secure capital from funds that may otherwise allocate a greater portion of their resources to Anthropic’s IPO, according to sources. OpenAI and SoftBank refrained from providing any commentary. Anthropic and MGX have yet to provide a response to enquiries for comment. “OpenAI could want to set its own valuation and not have ‌to worry about a comp (comparison),” said Edward Best. “It’s really a two-horse race in terms of being ‌public.” OpenAI has reduced prices on its more affordable models, which it claims has increased usage, and informed investors that it can further decrease the price of AI models, the individual noted.

Anthropic’s annualised revenue reached approximately $65 billion by July, as reported. Its quarterly revenue surged to $16.8 billion in the third quarter, up from $11.6 billion in the second quarter this year, as reported to investors. However, the deceleration in month-to-month revenue growth has prompted apprehensions among investors regarding its valuation. OpenAI aims to finalise its fundraising ahead of Anthropic’s financial disclosures, which would provide investors with a more comprehensive understanding of its operations and potentially lead to comparisons between the two firms, according to one source. The disclosures may lead investors to seek further clarification from OpenAI Chief Financial Officer Sarah Friar regarding the company’s revenue growth and financial outlook, the individual noted. OpenAI recognises revenue on a net basis, deducting partner shares at the outset. It has accused Anthropic of inflating its revenue by counting the full, gross value of contracts sold through third-party cloud providers. Anthropic informed earlier that it adheres to established accounting practices.

“OpenAI could want to set its own valuation and not have ‌to worry about a comp (comparison),” remarked Edward Best. It is fundamentally a two-horse race regarding public visibility. OpenAI received a valuation of $852 billion in March of this year, following an unprecedented funding round that raised $122 billion. This round included a significant commitment from Amazon.com, which pledged to invest as much as $50 billion in the organization. A number of companies preparing to go public have opted to delay their plans until after Anthropic’s anticipated IPO, cautious of vying for investor interest in the face of market volatility and a retreat in AI stocks, according to bankers and investors. Some late-stage companies are strategically scheduling private fundraising rounds to circumvent overlapping with Anthropic’s anticipated debut, according to bankers and investors. Some existing and prospective investors in Anthropic have contended that a valuation nearer to $1.5 trillion for its market debut is more appropriate-rather than the sought-after $2 trillion-following the AI startup’s third-quarter results, which did not meet expectations, as reported. The reassessment occurs in the context of a turbulent market since September, characterised by fluctuations in oil prices, increasing bond yields, and escalating concerns regarding AI safety, all of which are dampening investor enthusiasm for technology stocks.

Investors are meticulously examining the expenses associated with AI infrastructure, particularly the debt required to fund the data centers that are driving this surge. At the heart of the recent apprehensions is cloud provider CoreWeave, whose shares and debt experienced a decline last week as investors examined the nearly $50 billion in borrowings utilised to support its swift growth. The uncertainty has disrupted what had been anticipated as a bustling autumn for IPOs, with firms reevaluating their listing strategies in light of market volatility and apprehensions regarding valuations. AirTrunk REIT, supported by Blackstone, Firmus, backed by Nvidia, and SB Energy, which has the backing of SoftBank, have either withdrawn or suspended their public offerings. Nuclear services company Holtec referenced a “perfect storm,” primarily influenced by uncertainty surrounding data-center demand, as the reason for its decision to withdraw its US listing last month. Companies in the Philadelphia Semiconductor Index, often regarded as a barometer for AI-related semiconductor demand, have experienced a decline of $1.6 trillion in under two weeks, with AI infrastructure firms facing notable challenges.