OpenAI Faces Secondary Market Slump as Investors Pivot to Rival Anthropic
A recent Bloomberg report has highlighted a significant downturn in demand for shares of ChatGPT-maker OpenAI on the secondary market. According to the publication, this shift comes as institutional investors increasingly favor stakes in rival artificial intelligence firm Anthropic.
Investor Sentiment Shifts Amid Valuation Concerns
Ken Smythe, founder of Next Round Capital, provided a stark assessment of the situation. "We literally couldn't find anyone in our pool of hundreds of institutional investors to take these shares," Smythe told Bloomberg. He added that buyers have indicated they have $2 billion of cash ready to deploy into Anthropic, signaling a clear preference in the competitive AI landscape.
Elon Musk, who has been engaged in a public feud with OpenAI, responded to the report with a simple "Not surprising" comment, underscoring the ongoing tensions surrounding the company.
Secondary Market Dynamics and Regulatory Hurdles
Notably, both Anthropic and OpenAI maintain strict policies that prohibit investors from trading shares on secondary markets without explicit permission. Despite these restrictions, access to shares remains available through various platforms where investors sell their interests using alternative mechanisms such as special-purpose vehicles.
This market activity occurs against the backdrop of OpenAI's recent announcement to raise $122 billion in backing from tech giants, venture capital funds, and retail investors. This fundraising effort has been described as the company's "largest-ever" capital raise.
Institutional Investors Seek Exit Strategies
The Bloomberg report details how approximately half a dozen institutional investors, including hedge funds and venture capital firms holding substantial stakes, have approached Next Round Capital in recent weeks. These entities are looking to sell about $600 million worth of OpenAI shares, reflecting growing concerns about near-term returns.
In contrast, demand for shares in Anthropic has reached record levels on other marketplaces such as Augment and Hiive. Adam Crawley, co-founder of Augment, explained this trend to Bloomberg, citing the large valuation gap between the two companies. "It's just better risk-reward right now," Crawley stated. "People are betting that Anthropic's valuation will catch up with OpenAI's. But if you buy OpenAI shares, it's less clear what the return will be in the near term."
Currently, OpenAI boasts a valuation of $852 billion, while Anthropic is valued at $380 billion. This disparity has prompted investors to rush toward Anthropic equity in anticipation of potential valuation increases.
Banking Sector Involvement and Fee Structures
The report also sheds light on the role of major financial institutions in facilitating these transactions. Banks including Morgan Stanley and Goldman Sachs are offering OpenAI shares to wealthy clients without charging carry fees, according to a person familiar with the matter.
For Anthropic investments, Goldman Sachs is reportedly charging its usual carry fee for clients interested in the Claude-maker. This fee typically ranges from 15% to 20% of profits, highlighting the different approaches banks are taking toward these AI companies.
This evolving investment landscape underscores the competitive pressures and strategic calculations shaping the artificial intelligence sector, as stakeholders navigate complex market dynamics and regulatory frameworks.
