OpenAI offering Private Equity a return of 17.5% and early access to models

reuters.com

3 points·alecco··3 comments

Exclusive: OpenAI sweetens private equity pitch amid enterprise turf war with Anthropic, sources say

NEW YORK, March 23 (Reuters) - ChatGPT maker OpenAI is offering private-equity firms a sweeter deal than rival Anthropic as both artificial intelligence companies court buyout firms to form joint ventures aimed at raising fresh capital and accelerating adoption of enterprise AI products, according to people familiar with the talks.

OpenAI is offering private-equity firms a guaranteed minimum return of 17.5%, significantly higher than typical preferred instruments, two people familiar said. It is also offering early access to its newest AI models as it seeks to enlist investors like TPG and Advent for its joint venture, three sources said.

17.5% guaranteed return just to get PE firms on board sounds a bit desperate. If the product stood on its own above the competition this probably shouldn't be needed. Anthropic isn't offering such guarantees because Claude is already winning when it comes to value and quality.

This looks like IPO prep built on locking in customers, as switching the provider later is a pain.

Probably Thoma Bravo saw right through it.

These offerings are equity equivalent of a junk bond.

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