New Delhi: A group of investors, led by Elon Musk, has made a surprise offer of $97.4 billion to buy the nonprofit part of OpenAI. According to the Report, a lawyer representing the investors submitted the bid on Monday.
The investor group boasts some of the biggest names including Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, and venture firm 8VC founded by co-founder Joe Lonsdale of Palantir. Endeavor’s entertainment-giant CEO, Ari Emanuel is also a supporter of the bid through his investment fund.
OpenAI has a unique structure, with a nonprofit parent company (OpenAI) and a for-profit subsidiary (OpenAI LP), often called a “capped-profit” company. The for-profit arm was created in 2019 to attract large investments, like the billions it has received from Microsoft, because training AI models is extremely expensive. Now, CEO Sam Altman is reportedly planning to turn OpenAI’s for-profit division into a traditional company while spinning out the nonprofit, which would still hold equity in the new business.
This situation might feel familiar to OpenAI board member Bret Taylor, who was the chairman of Twitter’s board when Musk bought the platform in 2022. After the deal, Taylor and most of the board left Twitter.
Musk’s unexpected bid adds another layer to his ongoing feud with OpenAI and its CEO, Sam Altman. Musk, who co-founded OpenAI in 2015, has already sued the company twice, claiming it has strayed from its original mission of serving the public good and is now prioritizing profits. His second lawsuit, filed in November 2024, also targets Microsoft, OpenAI’s biggest investor.
If the bid is successful, Musk and other investors might end up holding a big share in the for-profit business of OpenAI. In comparison, Musk’s AI firm, xAI, builds language models that he considers to be much less biased and focused more on “objective truth.” While that’s going on, OpenAI continues on its path toward artificial general intelligence (AGI), where it tries to build AI that will greatly outperform humans in most economically valuable tasks.
OpenAI’s for-profit wing is growing very rapidly, with its CEO reported to be discussing an investment by Japan’s leading investment giant SoftBank, that is likely to touch $40 billion. At such a value, OpenAI will reach close to $300 billion in valuation.
