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OpenAI closes funding round at an $852B valuation

cnbc.com

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Re: OpenAI closes funding round at an $852B valuation

#231

Post by aurareturn »

jmward01 wrote: post #213

There is a lot of talk about the AI bubble. I think there are comparisons to the late 90's/early 00's here with early stars rising quickly but, ultimately, falling. Since essentially everything touches the internet now it is clear that the 'internet bubble' was more of a shakeup of companies than a real over-hype of the internet. That, I think, is at play right now too with the 'AI bubble'. AI isn't going away but so…

I don’t care if OpenAI is Netscape or Google.

What I want to know is are we in 1994 of the AI bubble or 1999?

Because even after the dotcom bubble popped, it was still much better than it was in 1994.

Re: OpenAI closes funding round at an $852B valuation

#232

Post by triceratops »

jacquesm wrote: post #226
triceratops wrote: post #217

Earlier quoted context omitted.

> To me it seems since the financial crisis 2008 investors don't enjoy stocks as before Maybe in Europe. The US stock market has nearly tripled since then. Literally the best period of stock growth in history.

"The Roaring Twenties roared loudest and longest on the New York Stock Exchange. Share prices rose to unprecedented heights. The Dow Jones Industrial Average increased six-fold from sixty-three in August 1921 to 381 in September 1929. After prices peaked, economist Irving Fisher proclaimed, "stock prices have reached 'what looks like a permanently high plateau.'" https://www.federalreservehistory.org/essays/stock-mar…

Ok second best :-) I wasn't alive in the 1920s though

Re: OpenAI closes funding round at an $852B valuation

#233

Post by pimlottc »

Aurornis wrote: post #184
apparent wrote: post #155

Earlier quoted context omitted.

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 "capi…

It’s confusing because it’s meant to be confusing. Bigger numbers are more impressive.

Re: OpenAI closes funding round at an $852B valuation

#234

Post by zer00eyz »

nine_k wrote: post #111
randomNumber7 wrote: post #59

Earlier quoted context omitted.

> Nobody apparently believes that capital is worth investing into anything but AI. This is the main reason we see this insane investment into AI imo. If you imagine having lots of money, where should you invest that currently? Housing market: Seems very overvalued (at least in germany). Also with the current uncertainty and inflation its hard to make an investment that pays back over 20-30 years. So building is also…

Looking around, and especially forward, it would be military tech, e.g. [1], and its supply chain, e.g. [2] :-\ Valuations are not as crazy, but I bet there'll going to be a lot of demand in the coming decade, unfortunately. Chip production, too, of course, but it's overflowing with money already, apparently. It's growing though, because there are real actual shortages of stuff like RAM and SSDs, there's money to be…

> it would be military tech

Anduril is the only company in this sector in the US that has any promise and they aren't even public. Most of us are not going to get our hands on this.

Traditional defense sector looks more like Jeep, or Kodak...

Re: OpenAI closes funding round at an $852B valuation

#235

Post by hn_throwaway_99 »

Aurornis wrote: post #184
apparent wrote: post #155

Earlier quoted context omitted.

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 "capi…

I've been involved in many startups, and this type of fundraising is not common, or at least it wasn't common before a few years or so ago

The whole concept of talking about "runway" is basically calculating how much cash in the bank, that is actually in your bank account, will last. And this arrangement is different, as there are contingencies. In the past, VCs would just give you money in a particular series, and then if your business did well, they'd eventually give you more money in a later series. But it wasn't like they announced it all up front in, say, a Series A, but a big chunk of the money would only be delivered if you met milestones.

Re: OpenAI closes funding round at an $852B valuation

#236

Post by jacquesm »

triceratops wrote: post #232
jacquesm wrote: post #226

Earlier quoted context omitted.

"The Roaring Twenties roared loudest and longest on the New York Stock Exchange. Share prices rose to unprecedented heights. The Dow Jones Industrial Average increased six-fold from sixty-three in August 1921 to 381 in September 1929. After prices peaked, economist Irving Fisher proclaimed, "stock prices have reached 'what looks like a permanently high plateau.'" https://www.federalreservehistory.org/essays/stock-mar…

Ok second best :-) I wasn't alive in the 1920s though

True, but it is close enough in time that we should heed the lessons learned lest we repeat the experience.

Re: OpenAI closes funding round at an $852B valuation

#237

Post by aurareturn »

winrid wrote: post #171
nenadg wrote: post #166

Earlier quoted context omitted.

Don't know why so many down votes for something that's clearly just another opinion

Probably because it reads a little like an LLM and also has an emdash

I’ve seen a lot of anti AI people use ChatGPT to write why AI bubble is about to pop.

Ironic, isn’t it?

Re: OpenAI closes funding round at an $852B valuation

#238

Post by munk-a »

johnebgd wrote: post #200
Aurornis wrote: post #184

Earlier quoted context omitted.

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 "capi…

Gotta hit that high IRR as a fund manager and the clock starts when the cash comes in so capital calls are appreciated by fund managers. Unless they are emerging managers (the startup equivalent in finance) and their LP’s are less than institutional and ghost them when the capital call hits.

IRR is so trivial to manipulate - it'd be wonderful if more investors began demanding actual metrics on capital performance. If you're parking cash with an investment firm you want to know about how much of a return you can expect when it is withdrawn, and while history is a guide and not a guarantee, there are much better ways to inform that expected return than IRR. "My million got a return of 2% during a year when your reported IRR was 10% - where's the other 8%!" is a common cry from those who haven't just rolled over their investment, unaware of how little it has functionally appreciated.

Re: OpenAI closes funding round at an $852B valuation

#239

Post by mizzao »

chilipepperhott wrote: post #143
nemo1618 wrote: post #7

I'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 would not call an effective 2.9% expense ratio "throwing a bone".

It's not that far off from the standard 2% mgmt fee and 20% of excess performance?

Re: OpenAI closes funding round at an $852B valuation

#240

Post by frankfrank13 »

nemo1618 wrote: post #7

I'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.

An ARK ETF is a smell to me. Besides, based on their holdings, i would never invest. 18% of the fund is SpaceX
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