OpenAI has overtaken SpaceX as the largest startup and most valuable private company in the world. Bloomberg has reported that the company has authorized a secondary share sale, which allowed its former and current employees to sell their stocks. OpenAI had authorized the sale of $10.3 billion in shares, but they ultimately sold $6.6 billion to investors that include Softbank, Abu Dhabi government’s MGX fund, American investment firm Thrive Capital and global investment management firm T. Rowe Price. As Bloomberg explains, that has boosted the company’s valuation to $500 billion from $300 billion, overtaking SpaceX with a $400 billion valuation and TikTok developer ByteDance at $220 billion.
In early September, OpenAI said it was getting closer to transitioning to a new structure that will turn it into a Public Benefit Corporation (PBC) controlled by its nonprofit arm. The company’s nonprofit division received an equity stake of more than $100 billion, making it a major shareholder of the PBC. SpaceX’s CEO Elon Musk is one of the biggest critics of OpenAI’s decision and has been trying to block the company’s for-profit transition in court. Musk was one of OpenAI’s founders and funded its initial operations. He claimed in court that OpenAI and Altman are breaking their contract with him and violating the company’s founding mission of building AI “for the benefit of humanity” by changing its structure.
OpenAI is hoping that being a PBC would make it more appealing to investors, as it would remove the cap on the financial returns they can get. It needs a lot more money than what it has raised so far, after all: OpenAI chief Sam Altman previously said he intends to spend trillions of dollars on building out data centers to run artificial intelligence services.
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