Investors Want Anthropic's IPO Price First: Is That Why OpenAI Cut $10 Billion?
OpenAI has reduced its funding target by $10 billion to $20 billion and lowered its valuation from $1.4 trillion to $1.25 trillion, citing investor hesitation ahead of Anthropic's IPO.
The ChatGPT maker's valuation dropped significantly amid a broader tech stock selloff that saw the Nasdaq-100 lose about $2 trillion in value during October. Investors have reportedly been hesitant to commit at the higher valuation, with some waiting to see Anthropic's IPO price before deciding on further investments in OpenAI.
Investor Hesitation
According to the Financial Times, OpenAI's funding pitch has struggled compared to previous rounds. "There has been zero clamouring. All the prior times [OpenAI] have been on there's been a frenzy. This time is a bit of a thud," said a person close to the matter.
There has been zero clamouring. All the prior times [OpenAI] have been on there's been a frenzy. This time is a bit of a thud.
Who Still Invests
Despite the reduced target, UAE investors including state-backed fund MGX are set to be the biggest buyers, with OpenAI gaining an option to lease computing power in the region. Founders Fund, Coatue, Sequoia Capital, and Andreessen Horowitz are also expected to join, though some professional investors have cut back at the $1.25 trillion valuation.
Early backers like Amazon, Nvidia, and SoftBank invested at an $852 billion valuation in March, meaning they're still ahead despite the new price being about 47% higher. Anthropic's potential Nasdaq listing as soon as mid-November could provide the price reference some investors demanded.
"The market needs to see a successful IPO. These companies need funding," said Jimmy Chang of the Rockefeller Global Family Office, who holds stakes in both labs. OpenAI plans its own listing in 2027, while Anthropic will face public buyers first.
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