SoftBank's $1.5 Billion Bet Boosts OpenAI Valuation to $157 Billion in Strategic AI Push

Word on the StreetWednesday, Nov 27, 2024 2:00 am ET

1min read

OpenAI has reportedly secured a significant $1.5 billion investment from SoftBank, a move that also allows current and former employees to sell their shares through a tender offer. This latest financial boost has amplified OpenAI's recent $6.6 billion funding round, propelling the company's valuation to $157 billion. The transaction is expected to conclude soon, with no prior reports on this new offer.

Driven by SoftBank's CEO Masayoshi Son, the deal reflects his sustained efforts to increase SoftBank's stake in OpenAI. Having already invested $500 million in a previous funding round, Son's interest demonstrates a focused strategy on AI startups. According to informed sources, this transaction is unrelated to any potential reorganization of OpenAI into a for-profit entity.

This development underscores Son's fascination with the AI sector and his continued backing of high-value private companies. SoftBank's involvement in OpenAI aligns with Son's ambition of leveraging significant capital in capital-intensive businesses. Known for early investments in companies like Arm, Son has shown intentions to advance further into the AI domain.

OpenAI remains an attractive venture, effortlessly gathering substantial financing even without SoftBank's contributions. The company's valuation surged to $157 billion after launching popular AI tools like ChatGPT. Recent successes have included $13 billion in funding from Microsoft and a $6.6 billion series led by Thrive Capital, with participation from industry titans such as Nvidia and SoftBank.

The current tender offer is open to those who have held restricted stock units for at least two years, rewarding eligible employees and former employees with a price aligned with recent fundraising efforts. During a period of tepid IPO market conditions and escalating company valuations, such opportunities provide liquidity to employees, mitigating pressures to pursue a public listing.

In response to liquidity concerns and market dynamics, OpenAI recently revised its policies on share sales, now allowing greater access for current and former employees to participate in annual tenders. Insiders suggest that increased secondary market transactions are likely, contingent on investor demand and the company's resource-intensive business model.

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