I thought they needed $7 trillion or they'd be unable to keep training new models?
[dead]
OpenAI closes funding round at an $852B valuation
181–190 of 529 posts
Re: OpenAI closes funding round at an $852B valuation
#182Earlier quoted context omitted.
Having large funding rounds contingent on meeting milestones is common. Always has been.
Why not announce the funding after the milestones have been met?
The funds are committed under the terms of the deal (share price, things like board seats, and other details). There are legal obligations to provide it.
This is a common structure for large investments. It would be really inefficient for all of these investors and companies to have to have the money sitting in cash to do a deal and then transfer it into the company's bank where it sits and earns interest for years until they can deploy it.
Even VC firms who raise funds work this way. The capital is "committed" but investors don't wire all of the money over right away so it can sit in the VC firm's bank accounts, waiting. The VCs do what's called a "capital call" through which they're legally bound to provide the money they committed when requested, under the terms of the deal.
Re: OpenAI closes funding round at an $852B valuation
#183Re: OpenAI closes funding round at an $852B valuation
#184No, they didn't raise $122B as the HN title implies. A big chunk of that $122B is a "maybe" that depends on various things that need to happen in the future. Oh, man... I can't wait to see where this is going. Might not be pretty after all.
I've wondered how many announced fundraising rounds were like this. It's in everyone's interest (VCs and entrepreneurs) if the message to the outside world is "this company is amazing so they've raised a boatload of cash". But VCs might not want to give it all up front, or unconditionally. It makes it hard to say what the valuation of a company is. If the milestones are unlikely to be hit, then it's anyone's guess.
This is a common structure. It's confusing to people who don't know finance or startups when they first see it.
Even VCs don't get all of their fund money delivered into their bank account when they raise a funding round. It's inefficient and undesirable for everyone involved to have to move all of the money up-front, at once.
If you talk to anyone in startup funding or finance they'll be familiar with the term "capital call" which describes how committed capital obligations are delivered at a later date than the initial deal: https://en.wikipedia.org/wiki/Capital_call
Re: OpenAI closes funding round at an $852B valuation
#185Earlier quoted context omitted.
Why are we treating OpenAI and Anthropic differently than say, Amazon or Uber? Both companies invested in growth for many years before making a profit. Most tech companies in the last 2-3 decades lost money for years before making a profit. Why are we saying that OpenAI and Anthropic can't do the same?
Two reasons. They somewhat broke even, and kept getting investment. The potential for quasi monopoly was obvious. Openai can't claim either.
How did Uber somewhat break even? They lost $34b before making a profit.
Uber was only on a path to monopoly in the US, not world wide. It’s lost to local competitors in most countries. And it can get disrupted by self driving cars soon.
OpenAI’s SOTA LLM training smells like a natural monopoly or duopoly to me. The cost to train the smartest models keep increasing. Most competitors will bow out as they do not have the revenue to keep competing. You can already see this with a few labs looking for a niche instead of competing head on with Anthropic and OpenAI.
Re: OpenAI closes funding round at an $852B valuation
#186This all smells fishy. They didn’t “raise” $122B. Raise means someone put funds in your bank account and said send us the next quarterly report to tell us how our investment is doing. They have pieces from paper of folks saying they may put up funds or goods and services in that amount. But it’s important to remember that: 1. While they are “raising” commitments others are backing out of deals (see Disney, various da…
Are we truly arguing semantics on HN which is a news aggregator for startups and everyone truly knows what a "raise" is and it is obviously not funds in your bank account? I don't disagree with the rest of your comment and the core thesis is valid that OpenAI is very much doing circular financing. Edit: A raise comes with stipulations on what you can use the money for. I don't know if I was being too mean about respo…
So when my coworker tells me he got a "raise", they're not talking about money that will end up in their bank account?
Re: OpenAI closes funding round at an $852B valuation
#187Are we going to see a trillion dollar IPO?
Re: OpenAI closes funding round at an $852B valuation
#188Good luck competing with Google which has "unlimited" budget.
Re: OpenAI closes funding round at an $852B valuation
#189With $122B what are you going to build next? Spaceships?
All the high performance RAM, frontier node wafer capacity, flash and disk drives on Earth. Also, all the gas turbines.
If they buy all the jet engines too (to turn them into gas turbines) they can be carbon neutral. More gas burned, but less jet fuel. It's a win-win.
Re: OpenAI closes funding round at an $852B valuation
#190I'm old enough to remember when companies worth $1 billion were called "unicorns." Now we have a company raising 122 times that? Valued at nearly 1000 times that...? At least they're throwing consumers a bone via the ARK deal. It's crazy how little AI exposure is available to anyone who isn't already wealthy and/or connected.
I think this is reality-distortion field rivaling that of Jobs', and a crisis of faith. Nobody apparently believes that capital is worth investing into anything but AI.
I wonder what is not getting invested in bc AI has been crowding out everything else since 22.
It has to be brutal out there for everybody else, if all the money is going to AI.