TheChek News Flow

MDAX:

SDAX:

When Will We See a $100 Billion-Valuation Startup Go Public?

For years, there has been speculation about when $100 billion-plus private tech companies like Stripe, SpaceX and Databricks could go public. Now AI darlings OpenAI and Anthropic are on IPO watch.

Like every company that takes on significant venture capital, both companies have had early conversations with financial institutions about the possibility of eventually going public, according to our sources. “Talk of a potential IPO or other exit someday helps with late stage fundraising,” said Lise Buyer, partner and founder at Class V Group, an IPO advisory firm, since “people want a return on their dollars.”

But for the most part, for these mega private tech companies, it’s been all talk and little action. Now Anthropic has taken an early step, with the Financial Times reporting that it has hired Wilson Sonsini for IPO prep. It’s worth noting that law firms are hired very early in the journey, often years before an actual public debut. Industry observers speculate that most likely these AI IPOs won’t happen until 2027 or later.

Anthropic and OpenAI may have more incentive to go public than some of the other businesses that have delayed IPOs. The AI businesses are capital intensive and may want greater access to individual investors and other public funds than other similarly sized startups. The market is also particularly bullish on AI at the moment.

“Clearly they are growing rapidly, clearly they have needs for incremental funds,” said Buyer about the AI sector broadly.

She said that there could be added challenges when OpenAI and Anthropic finally debut, however. Both would likely want to raise large sums of capital, but issuing a huge amount of new shares could be challenging.

“If you flood the market with too much supply, you have the issue of where will subsequent demand come from,” she pointed out.

The cap tables could also get a bit complicated. Ever since the JOBS Act was instituted in 2012, private companies are no longer required to go public once they reach 500 shareholders, as they did in Facebook’s day. As a result, private companies now have thousands of shareholders, who often buy shares via secondary transactions.

This takes off some pressure on a company to go public. But when they do, many will likely want to sell. These startups will need to manage lock-ups, restrictions on when shareholders can sell in an IPO.

Buyer said for these mega companies, should they pursue an IPO, “The overall process of going public is unchanged, but the legal details of getting lockup signatures are significantly more complicated.”

Anthropic surely recognizes that it needs to get its legal team in order.

To a casual observer, OpenAI and Anthropic might have appeared—until recently—to be the Uber and Lyft of the AI world, with Anthropic the distant rival to the dominant OpenAI. That feels to be less the case nowadays. In fact, Anthropic—with its disciplined focus on serving businesses and expectations it will turn a profit several years before OpenAI does—is starting to look like a surer bet. Anthropic CEO Dario Amodei’s appearance at The New York Times’ DealBook summit on Wednesday demonstrated why. Amodei came across as thoughtful in his approach to risk management, unlike an unnamed other person who, as Amodei put it, “constitutionally just wants to YOLO things.” (For more on the contrast between the two, check out this article.)

YOLO is the perfect description of OpenAI CEO Sam Altman’s growth strategy. The latest example was Thursday’s Wall Street Journal report that Altman had explored the idea of OpenAI buying control of a rocket company. Why stop at rockets? What about cars? Consider that in the past couple of years, Altman has expanded OpenAI’s purview from running the hugely popular ChatGPT to include designing its own chip, building data centers, designing AI-specific devices, developing hardware and software for robots, expanding ChatGPT into shopping, launching a web browser and a search engine, investing in a company affiliated with one of his main backers, Thrive, and partnering with a bunch of other companies to make ChatGPT a kind of superapp.

All this comes before OpenAI gets anywhere close to making money or finding a way to pay for the $1.4 trillion in commitments it has taken on to get enough computing capacity to run ChatGPT as it grows. It seems predictable, then, that as part of the “code red” Altman declared this week to fight an ascendant Google, he said OpenAI would delay some initiatives, as my colleagues reported.

If OpenAI investors are lucky, this code red will prove a permanent shift in strategy, where Altman decides to narrow his focus to the most important priorities, such as ensuring that ChatGPT retains its technological edge and gets to profitability sooner. That would mean ditching some of his more blue-sky projects (such as the devices). But there’s also a possibility that Altman is, to use Amodei’s word, constitutionally incapable of carrying out anything other than a YOLO-based strategy. If that’s the case, Altman might be better as OpenAI’s chair, in the role of thinking about the future, while someone with their feet on the ground actually runs the company. Perhaps OpenAI needs its own Dario Amodei.

Google has agreed to backstop Fluidstack’s leases to use three data centers currently under development. Fluidstack agreed to host Google’s TPUs in at least one New York–based data center. Anthropic said last month it planned to use up to 1 million TPUs as part of an expanded contract with Google and to invest $50 billion, alongside Fluidstack, in U.S.-based data centers.

Founded eight years ago, London-based Fluidstack has grown quickly over the past year as it has signed big contracts with customers, though it has raised scant equity funding to date.

Fluidstack has relied on borrowed money to fund its server costs. Earlier this year, it secured approval from lenders including Macquarie for more than $10 billion in credit backed by AI chips, including Nvidia’s.

Fluidstack in July projected it would generate more than $400 million in sales this year, The Information reported. It generated more than $65 million in revenue last year, according to a local regulator filing.

That would make Fluidstack a fraction the size of CoreWeave, which projected revenue will double this year to more than $5 billion. Crusoe and Lambda, two other privately held AI cloud providers, have raised a combined $2.9 billion over the past two months to expand their server rental businesses.

Cloud providers focused on AI, including Oracle, have lately faced questions about the profitability of renting out pricey AI chips and about the debt they’re raising to obtain the chips.

Aschenbrenner’s Ascent

Aschenbrenner graduated from Columbia University when he was 19 and previously worked at the Future Fund, a philanthropic fund started by former FTX CEO Sam Bankman-Fried.

At OpenAI, Aschenbrenner worked on techniques for developing AI safely. He was an ally of OpenAI co-founder Ilya Sutskever, who participated in a failed effort to force out OpenAI CEO Sam Altman in late 2023.

In 2024, OpenAI pushed out Aschenbrenner, alleging he had improperly shared information with outsiders. He later said on the “Dwarkesh Podcast” that though he had shared a document with external researchers for feedback, he had removed sensitive information from it. Aschenbrenner said OpenAI took issue with the fact that the document revealed OpenAI was planning to reach “artificial general intelligence” by 2027 or 2028 and had not set “timelines for preparedness.”

“I didn’t think that planning horizon was sensitive,” Aschenbrenner said on the podcast. “It’s the sort of thing Sam says publicly all the time.”

Aschenbrenner also said he also shared a memo with OpenAI board members after a major security incident, which led to him receiving an “official HR warning.”

“The thing I understand, and in some sense it’s reasonable, is that I ruffled some feathers and was probably annoying at times with the security stuff,” he said.

Later last year, he published a manifesto on AGI titled “Situational Awareness,” and started an investment fund under the same name. He secured investments from former GitHub CEO Nat Friedman, investor Daniel Gross, Stripe CEO Patrick Collison and Stripe President John Collison. The fund manages more than $1.5 billion and also invests in public semiconductor and infrastructure companies.