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VCs Weigh OpenAI Tender Offer As Microsoft Investment Talks Remain Ongoing
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VCs Weigh OpenAI Tender Offer As Microsoft Investment Talks Remain Ongoing

The hype around OpenAI is red hot; deal terms remain in flux

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Eric Newcomer
Dec 14, 2022
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VCs Weigh OpenAI Tender Offer As Microsoft Investment Talks Remain Ongoing
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OpenAI CEO Sam Altman (Photo by Kevin Dietsch/Getty Images)

A group of high-profile Silicon Valley investors have been kicking the tires on buying shares from OpenAI shareholders. In parallel, Microsoft has been in talks with OpenAI about a potential direct investment in the artificial intelligence company, according to people familiar with the matter.

As investors weigh whether to buy OpenAI shares at some uncertain astronomical valuation, top of mind is the state of the company’s partnership with Microsoft.

Sources tell me that Microsoft has considered making a potential multi-billion dollar investment in the artificial intelligence company. A deal has not been signed and the structure of the investment remains up in the air.

Valuation rumors abound. Pinning down an official valuation has been made more complicated by OpenAI’s convoluted deal terms.

In October, The Information previously reported that OpenAI and Microsoft were in talks for a potential investment. I’ve got some new color on the conversations with investors and am getting signals that the Microsoft investment, if it comes together, could end up being quite large. The appeal of OpenAI has only exploded since The Information’s story. OpenAI released ChatGPT Nov. 30.

Beyond Microsoft’s strong belief in OpenAI, there’s some logic to the technology giant pouring billions into the artificial intelligence company: OpenAI would likely be expected to turn around and spend the money on Microsoft’s cloud computing.

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