AI War | OpenAI Offers 17.5% Return Rate to Attract Private Equity Investment

OpenAI, the developer of ChatGPT, and its competitor Anthropic are competing to attract private equity (PE) firms to form joint ventures to raise new funds and accelerate the promotion of enterprise-level AI products. Reuters, citing sources familiar with the matter, reports that OpenAI is offering more favorable terms to private equity firms than Anthropic.

Sources say that OpenAI is offering preferred stock investments to private equity firms, with a minimum return of 17.5%, significantly higher than common preferred investment tools. OpenAI is also providing potential partners with priority access to its latest AI models to attract investors like TPG and Advent to join its joint ventures. In contrast, Anthropic’s previous private equity partnership plans for enterprise clients did not offer such returns.

Recently, OpenAI has noticeably increased its focus on the enterprise market, an area where Anthropic has traditionally been strong. Both OpenAI and Anthropic are competing to establish partnerships with private equity firms, which would enable them to quickly deploy AI tools across hundreds of mature private companies under PE ownership, thereby promoting large-scale application of their models and increasing customer stickiness.

Sources indicate that the joint venture structure can help share the high upfront costs of deploying engineers to customize models for clients, easing the cost pressures on OpenAI and Anthropic before their IPO, and providing clearer business segment reporting to support their IPO disclosures.

Boston Consulting Group (BCG) notes that there is currently intense competition, with all parties eager to lock in as many enterprise clients and business units as possible. Once companies integrate customized AI models into their systems, it becomes difficult to switch to competitors.

OpenAI: Close ties with Microsoft may pose potential risks to its business

Additionally, CNBC, citing documents similar to those in an initial public offering (IPO) prospectus, reports that OpenAI states its close relationship with Microsoft could pose potential risks to its business, and reveals that Microsoft is responsible for a significant portion of OpenAI’s funding and computing resources.

OpenAI states in the documents that if Microsoft modifies or terminates its commercial partnership, or if the company fails to successfully diversify its business partners, its business, prospects, operating performance, and financial condition could be adversely affected.

Microsoft was one of OpenAI’s earliest investors, investing $1 billion in 2019, and again investing $10 billion in early 2023. In September last year, the two companies signed a non-binding agreement under new cooperation terms, paving the way for collaborations with companies like SoftBank, Nvidia, and Amazon.