OpenAI raising capital did not go as planned

According to the Wall Street Journal, OpenAI initially aimed to raise about 30 billion USD in the new round, but now only has about 11 billion USD in commitments, less than half. Some large investors appear quite indifferent. The valuation of this round is 1,250 billion USD, lower than the 1,400 billion USD that OpenAI once hoped to achieve.

Financial Times, through Reuters news, said OpenAI has lowered its target to about 20 billion USD, a decrease of 10 billion. The company set a deadline last Friday for investors to finalize their commitments, but the initial closing is expected to be less than 20 billion because some parties have reduced their contributions. CNBC also confirmed the $20 billion figure, noting that this round has not yet closed, so the numbers may still change.

The next plan, according to WSJ, is that in the next few weeks OpenAI will knock on the doors of family offices, family wealth management offices, and wealthy individuals. FT said the rich will be bought in a later retail sale, still at a valuation of 1,250 billion USD.

According to FT, a group of investors from the UAE, including state-backed technology fund MGX, will be the largest contributor. In return, OpenAI has the right to rent newly built computing capacity in this area. CNBC said the UAE group led the round along with Coatue. Familiar funds such as Founders Fund, Sequoia Capital and Andreessen Horowitz are also expected to participate.

Details about the UAE are quite remarkable. It shows that OpenAI's capital is not just money, but also tied to server space and power, which AI companies are lacking the most.

Why are investors slowing down

OpenAI's capital call time fell the same week the US technology market plummeted. According to CNBC, Alphabet had its worst trading day in history on Thursday after search revenue was lower than expectations. On Friday, Intel dropped 25% because of poor revenue forecasts, Micron dropped 5.5%, Nvidia dropped 4%. Reuters said the Nasdaq index fell 2.9% on Friday alone and was 7.8% lower than its peak on October 6.

CNBC also pointed out that Microsoft, Google and Amazon all gave figures or forecasts for spending on infrastructure lower than analysts expected. The question that investors are asking is very straightforward: will the money poured into data centers and GPUs be paid back enough? According to WSJ, investors are now more selective about who they invest money in and under what conditions.

In my opinion, the fact that OpenAI raised 11 billion USD at such a time is still a very large number. But falling short of the plan is a signal that the phase where everyone who makes AI can get money is gradually passing.

Anthropic publicly announces listing documents

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Meanwhile, on October 26, Anthropic announced that it had filed an S-1 file with the US Securities Commission SEC for its initial public offering. Class A shares will be listed on the Nasdaq Global Select exchange with the code ANT. The number of shares and price range have not been decided, Goldman Sachs and Morgan Stanley are the two banks named in the announcement. According to CNBC, Anthropic filed confidential documents in June for the SEC to preview financial data.

This profile lets you look at the books of a large AI lab for the first time. According to The Verge, the first half of this year Anthropic had revenue of 16.3 billion USD but a net loss of 80.7 billion USD. The loss figure sounds very shocking, but WSJ once said that most of this amount comes from accounting entries related to debt papers issued by the company to raise capital, not all money spent.

The more interesting part is that money buys computing power. The filing lists paying SpaceX about $3.1 billion per month to use Nvidia GPUs when full capacity is delivered, a total that could reach $120.5 billion by 2029. There's also at least $114.5 billion with Google and $44.9 billion with Microsoft through 2033, and $110 billion with Amazon over the next 10 years.

Unusual structure and self-declared risks

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According to SEC filings, Anthropic is a public benefit company, referred to as PBC, so it must balance shareholder interests and the goal of responsible AI development. An independent trust called the Long-Term Benefit Trust holds class T shares, with the right to elect a majority of the board of directors. The seven co-founders, including CEO Dario Amodei and president Daniela Amodei, hold a single class F stock through a separate company, accounting for 50.1% of total voting rights. To put it simply, buyers of ANT shares will have a share in profits, but almost no say in management.

The list of risks in the profile is also quite strange compared to a typical technology company. According to The Verge, Anthropic mentions the possibility of AI models developing a form of sentience, AI-specific taxes, copyright lawsuits over training data, and the risk of catastrophic AI incidents that even the insurance industry may not be able to handle.

One more fun detail: according to CNBC, the ANT code is currently being used by a six-person mineral exploration company in Canada, Anteros Metals, on the Canadian stock exchange.

The race to the floor and what users get

According to Reuters, OpenAI is aiming to list in 2027 and wants to close this funding round early, partly to get ahead of Anthropic's listing, because the two companies are knocking on the door of the same group of investors. The Verge commented that filing the S-1 helps Anthropic stay one step ahead of OpenAI on the way to the market.

For those of you who use ChatGPT or Claude every day, this is not just financial news. When money is harder to raise and books must be made public for shareholders to see, the pressure to be profitable will be greater. I guess you will see many changes in the way limits are calculated, package prices and which features are free and which have to be paid. This is my speculation, no company has said so.

Two stories in the same week show that AI is still attracting money very strongly, but investors are starting to demand to see real data. When Anthropic announces the price range and OpenAI closes the funding round, I will update you guys.