OpenAI is reportedly moving ahead with a multibillion-dollar secondary share sale at a staggering $500 billion valuation, but veteran venture capitalist Bill Gurley is signaling caution to investors.
Gurley Quotes Howard Marks On Insider Selling
Gurley, a general partner emeritus at Benchmark known for early bets on Uber Technologies and OpenTable, posted a reminder on X, formerly Twitter, about the risks of buying when insiders are eager to sell.
"For every buyer there's a seller, and one must ask: why would the other fellow be willing to part with a position that you think is attractive? If you can't answer that question, you probably shouldn't be buying," Gurley quoted Oaktree Capital's Howard Marks as saying.
His comment came as CNBC reported that OpenAI has increased the size of its secondary sale from $6 billion to $10.3 billion, giving employees and early investors the chance to cash out at a record valuation.
OpenAI did not immediately respond to Benzinga’s request for comments
OpenAI's $500 Billion Valuation Fuels Debate
The deal values OpenAI at roughly $500 billion, up from the $300 billion valuation set earlier this year.
Employees with more than two years of tenure have until the end of September to decide whether to sell their shares, with the transaction expected to close in October.
Big-name investors, including SoftBank Group (OTC:SFTBF) (OTF: SFTBY), Dragoneer Investment Group, Thrive Capital, Abu Dhabi's MGX and T. Rowe Price are participating, said the report, citing sources.
Aggressive Acquisitions And Retention Push
The expansion of the share sale comes alongside OpenAI's spending spree. On Tuesday, the company announced the $1.1 billion acquisition of Statsig, a product experimentation startup, with its founder Vijaye Raji joining as chief technology officer of applications.
It follows July's $6.5 billion all-equity purchase of Jony Ive's AI hardware company io, as well as the 2024 acquisition of Rockset. A planned $3 billion buyout of coding tool Windsurf was scrapped earlier this year.
OpenAI has also offered employees retention bonuses worth $1.5 million over two years as it battles rivals like Meta Platforms, Inc. (NASDAQ:META) and Nvidia Corporation (NASDAQ:NVDA) in a fierce AI talent war.
Revenue Growth And Investor Appetite
OpenAI's annual revenue has climbed from $10 billion in June to $13 billion, with forecasts suggesting it could surpass $20 billion by the end of the year. The company now counts 700 million weekly ChatGPT users and five million paying business subscribers.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
