OpenAI Tender Offer on Track Despite Leadership Tumult, Board Shuffle, Valuation Stands at $86 Billion
Amidst the recent leadership tumult and board shuffle at OpenAI, the company’s tender offer is reported to remain on track. The offer will allow employees to sell shares in the start-up to outside investors. The valuation of OpenAI stands at $86 billion, the same as previously reported in October. The tender offer is being led by Josh Kushner’s Thrive Capital. The round and previously reported valuation were in jeopardy after CEO Sam Altman’s temporary ouster, but his return has cleared the way for the tender offer to proceed.
Tender offers do not involve the issuance of new equity. Instead, Thrive and other involved investors will buy existing units belonging largely to employees, giving them liquidity. The $86 billion round is three times OpenAI’s previous fundraise in April, which valued the company at around $28 billion. The round has been extended to January 5, according to a person familiar with the matter.
OpenAI’s nonprofit board had argued earlier that Altman “was not consistently candid in his communications with the board” as CEO, and his subsequent departure incited uproar from investors and employees alike. However, on Wednesday, OpenAI announced Altman and Greg Brockman’s official return to their previous roles, along with a new board, including former Salesforce co-CEO Bret Taylor, former Treasury Secretary Larry Summers, and Quora CEO Adam D’Angelo. Microsoft obtained a non-voting board observer position, following which CEO Satya Nadella said new governance would be required at the startup. Microsoft holds a 49% stake in OpenAI. Not all major backers will receive a director position. Tiger Global will not likely pursue a board seat, a person familiar with the matter said, and Sequoia Capital and Founders Fund will not participate in the tender offer.
The completion of the tender offer is highly anticipated; however, speculation still surrounds whether Sequoia Capital will be involved. Founders Fund will not participate in the tender offer, and Thrive declined to comment beyond saying it remained “committed” to OpenAI. OpenAI has not responded to CNBC’s request for comment as of yet.
The rollercoaster couple of weeks for OpenAI seems to have had no effect on the completion of the tender offer, suggesting the company’s determination to push forward in its mission and maintain operations amidst internal changes.
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