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OpenAI closes funding round at an $852B valuation

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

#251

Post by danielmarkbruce »

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…

No, it's not common for the startup itself to make capital calls. The phrase (and your link) refers to capital calls made by VC firms to their limited partners. Same thing in PE.

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

#252

Post by nl »

bandrami wrote: post #175
merlindru wrote: post #119

Earlier quoted context omitted.

why should only profits matter? if i had a killer product today that i just need to sell tomorrow, wouldn't you still invest today knowing i'll probably only start to make money tomorrow (or perhaps next week)? the expectation is that they'll eventually make money. they can't raise forever. only startups are not profitable for a few years. but most companies that have existed for a long while have been profitable and…

> why should only profits matter? In this case because it's not clear that anybody has actually figured out how to sell inference for more than it costs

It's well know everyone is making great money on inference. The cost is training.

Whether GPT-5 was profitable to run depends on which profit margin you’re talking about. If we subtract the cost of compute from revenue to calculate the gross margin (on an accounting basis),2 it seems to be about 30% — lower than the norm for software companies (where 60-80% is typical) but still higher than many industries.

(They go on to point out that there are other costs that might mean they didn't break even on other costs - although I suspect these costs should be partially amortized over the whole GPT 5.x series, not just 5.0)

https://epochai.substack.com/p/can-ai-companies-become-profi...

https://martinalderson.com/posts/are-openai-and-anthropic-re... (with math working backwards from GPU capacity)

"Most of what we're building out at this point is the inference [...] We're profitable on inference. If we didn't pay for training, we'd be a very profitable company"

https://simonwillison.net/2025/Aug/17/sam-altman/

"There’s a bright spot, however. OpenAI has gotten more efficient at serving paying users: Its compute margin—the revenue left after subtracting the cost of running AI models for those customers—was roughly 70% in October, an increase from about 52% at the end of last year and roughly 35% in January 2024."

https://archive.is/OqIny#selection-1279.0-1279.305 (Note this is after having to pay higher spot rates for compute because of higher than expected demand)

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

#253

Post by manquer »

SilverElfin wrote: post #202
manquer wrote: post #132

Earlier quoted context omitted.

They aren't reporting anything yet. What we hearing is just from news media who get their leaks/info from investors who get some form of IR reports/ presentation. Both will do public reporting only when they IPO[4] and have regulatory requirement to do so every quarter. For private companies[1] reporting to investors there are no fixed rules really[3] Even for public companies, there is fair amount of leeway on how G…

Does the GAAP accounting matter if everyone passively buys shares due to the new fast entry rules, which corruptly will force us all to buy into these companies? The fundamentals and true value seem less relevant than ever: https://www.benzinga.com/markets/tech/26/03/51248353/michael...

Diluting the index entry rules, only devalues the index utility. When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety.

More likely than not, most of us are already holding stock in these companies one way or another. All the Mag 7 hold a major chunk of OAI and Anthropic stock anyway, slower entry does not make it less risky for us.

Even if the big tech companies did not hold any stock, they are still the biggest vendors and their own order books is hugely impacted by the AI demand from these two ( and others in this space), either way we are all in this together.

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

#254

Post by [deleted] »

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…

[deleted]

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

#256

Post by delecti »

jonah wrote: post #204
winrid wrote: post #168

Earlier quoted context omitted.

Not really. Most people won't self host.

The general public will self-host it's built in to your next phone or laptop straight out of the box or maybe from the App Store.

I agree that that's what it would take, but compute would need to get very cheap for it to be feasible to keep models running locally. That's an awful lot of memory to have just sitting with the model running in it.

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

#258

Post by zzrrt »

zozbot234 wrote: post #186
zitterbewegung wrote: post #82

Earlier quoted context omitted.

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?

It's a different definition of the word for one thing, and anyway, unless their compensation is prepaid this would only suggest that "raise" doesn't mean liquid money in an account, because an employee's raise is a promise to pay an amount over the remainder of the year with the stipulation the employee continues at the job.

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

#260

Post by toraway »

aurareturn wrote: post #237
winrid wrote: post #171

Earlier quoted context omitted.

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?

  > I ship code every day. I use Claude, I use GPT, I run llama locally.
An "Anti AI" person...
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