OpenAI’s September Price Didn’t Survive October

In early October, Morgan Stanley bankers and the tech fund Dragoneer were taking OpenAI around to the bank’s private wealth clients with a price attached: $1.4 trillion, pre-money, take it or leave it. The answer came back fast. A person with knowledge of the process described it to the FT as “a bit of a thud.”

Up to $30 billion at a $1.25 trillion pre-money valuation, led by Coatue and investors in the United Arab Emirates. That is where the round stands, per CNBC’s October 22 report. The company told investors Thursday it wants signatures by the end of next week. Bloomberg confirmed the shift a day later: the figure under discussion has moved $150 billion in a matter of weeks, and the final terms are still being negotiated.

Mid-September’s number was $1.2 trillion. On September 29 it was $1.4 trillion, presented to prospective investors as a fixed price before any lead investor had been named, an unusual posture for a private round. The $1.25 trillion figure arrived only after the process acquired the things September lacked: Coatue in talks to co-lead, a deadline on the calendar, and terms that are, by every account, still being negotiated. That is the negotiation, and it reads like one: the difference between a price OpenAI announced and a price it had to agree with someone.

One source involved in the Morgan Stanley-led process told the FT: “There was no rush of investors saying they wanted in.” In past rounds, the same source said, “every time an OpenAI investment opportunity emerged, a frenzy followed, but this time the response has been underwhelming.” Some investors who had poured large sums into earlier rounds were described as feeling investment “indigestion,” and analysts noted the revision was “not unrelated to rising market concerns over AI infrastructure investments that rely heavily on borrowing.”

OpenAI’s March round valued the company at $852 billion post-money, when it said it was generating about $2 billion a month, roughly a $24 billion annual run rate: about 35 times revenue. At $1.25 trillion against the roughly $50 billion annualized revenue OpenAI reported to investors for the end of September, per the FT, the multiple is about 25 times. The valuation is up nearly 50 percent since March. The price per dollar of revenue has fallen by roughly a third.

The money is not coming alone. CNBC reported that the UAE investment could be coupled with a commercial deal securing more computing capacity for OpenAI from the Emirates. The chips come with the cheque. OpenAI’s compute spending is being financed in the same conversation as its equity, and it is the Gulf states writing both halves of it.

OpenAI told investors Thursday it wants signatures by the end of next week, and Reuters reported on October 19 that the company is rushing to lock down commitments before Anthropic’s expected listing next month draws on the same pool of capital. Anthropic raised $65 billion at a $965 billion valuation in May and is reported to be targeting $1.5 to $2 trillion for its public debut. The same week, Meta and Tesla’s mixed earnings sent tech stocks sliding on renewed doubts about AI spending.

A close above $1 trillion would make OpenAI the most valuable private company on record, $150 billion below the figure the October process opened with. OpenAI declined to comment. Coatue did not respond to a request for comment.