OpenAI Runs a $7 Billion 'Open Bar' for Its Own Employees at a Flat $852B Mark

Live look at the funding round… 

OpenBar (read: OpenAI) closed a $7 billion tender offer on Monday, and for the first time nobody else was putting out. Current and former employees got to sell their shares back at an $852 billion valuation, straight cash, homie, out of the same balance sheet that loses roughly $1.22 for every dollar of revenue it books. The last two times the company ran one of these, it invited Thrive Capital and SoftBank to write the checks. This time it wrote its own.

The deal has been in the baby maker (read: oven) since March, when OpenAI closed a $122 billion funding round, the largest private raise ever assembled. Roughly $7 billion of paper came off the cap table and employees sitting on locked-up equity finally watched money hit an account… all in the name of an $852B valuation. 

Meanwhile, at Anthropic a $65 billion raise in May at $965 billion, a confidential S-1 on file since June 1, and an October listing circled on the calendar. Its annualized revenue passed OpenAI's on the way by. (Yes, revenue. The actual kind.) Which means, the underdog is worth $113 billion more than the company that put a chatbot in your mother's phone, and it's going to ring the bell first. Impressive. Very nice. 

The question though, is why cut the checks now? The polite version is that the tender keeps a few thousand decamillionaires from walking out the door six weeks before a roadshow "alleviates near-term pressure for liquidity." Employees have to sit two years before they can sell a single share. The last tender capped each seller at $30 million and about 75 people hit that ceiling anyway. (Imagine being mad about that.) When the rival across town is minting public-market money in October, the paper in your desk drawer starts to feel like a f*cking hostage. 

That said, the cash is real cash. OpenAI burned $3.7 billion in the first quarter against $5.7 billion of revenue, its own forecast has it losing about $14 billion this year, and it doesn't pencil in a cash-flow-positive year until 2030. Seven billion of that war chest just went to buying back its own paper instead of the compute that makes the ish work. (Because, math). 

But alas, everybody who wanted out this week got out at the March price. Everybody who stayed is holding a number the house set, waiting on a trillion-dollar headline that has to arrive before Dario rings his bell in October. Translation: The drinks are free, the tab is enormous, and exactly one party has agreed to what any of it is worth. Last call, and the house is buying.

Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.