OpenAI Concludes Tender Offer as Competition for AI Talent Intensifies
2 min read OpenAI completes tender offer allowing employees to cash out holdings at a valuation of ~$27bn. Investors purchase rights to future profits rather than equity. The structure of the deal has deterred some investors. Microsoft will receive 75% of profits until its principal investment is repaid. April 17, 2023 21:42
OpenAI has completed a tender offer, enabling some of its employees to cash out their holdings. The offer, which allows investors to purchase employee profit units, has been negotiated at a valuation of roughly $27bn, although the size of the deal has not been disclosed. The move follows Microsoft’s multibillion-dollar investment in the company in January, which saw the tech giant offer credits for its Azure cloud computing platform in exchange for access to OpenAI’s generative AI technologies.
Although the tender offer is expected to have rewarded some of OpenAI’s 400 employees, the structure of the deal has deterred some investors. The company is controlled by a non-profit entity, while investors purchase rights to future profits, rather than traditional equity. After Microsoft is repaid its principal investment, it will receive 75% of profits, with the remaining 25% going to employees and other investors.
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