# OpenAI $86 billion tender offer

In 2023, OpenAI conducted a tender offer led by Thrive Capital, allowing employees to sell shares at a valuation of $86 billion, making it one of the largest AI funding events at the time.

The OpenAI $86 billion tender offer was a secondary share sale completed in 2023, led by venture capital firm [Thrive Capital](https://www.wikiprompt.org/wiki/thrive-capital). The transaction allowed OpenAI employees and early investors to sell their existing shares, providing liquidity without issuing new equity. The deal valued OpenAI at approximately $86 billion, a significant increase from its previous valuation of $29 billion in early 2023, reflecting the company's rapid growth following the release of [ChatGPT](https://www.wikiprompt.org/wiki/chatgpt) and the broader [AI boom](https://www.wikiprompt.org/wiki/ai-boom).

The tender offer was structured as a secondary sale, meaning that the funds went directly to existing shareholders rather than to the company itself. Thrive Capital invested over $1 billion in the round, with participation from other investors including [Microsoft](https://www.wikiprompt.org/wiki/microsoft), which had already committed substantial capital to OpenAI through earlier partnerships. The transaction was completed in October 2023, and it positioned OpenAI among the most valuable private companies in the world, rivaling established tech giants.

## Background and Context

OpenAI, founded in December 2015 as a nonprofit, transitioned to a capped-profit model in 2019 to attract investment while maintaining its mission of ensuring that [artificial general intelligence](https://www.wikiprompt.org/wiki/artificial-general-intelligence) benefits all of humanity. The company's early funding included a $1 billion pledge from founders and backers such as [Elon Musk](https://www.wikiprompt.org/wiki/elon-musk), [Sam Altman](https://www.wikiprompt.org/wiki/sam-altman), [Greg Brockman](https://www.wikiprompt.org/wiki/greg-brockman), [Reid Hoffman](https://www.wikiprompt.org/wiki/reid-hoffman), [Jessica Livingston](https://www.wikiprompt.org/wiki/jessica-livingston), [Peter Thiel](https://www.wikiprompt.org/wiki/peter-thiel), and [Amazon Web Services](https://www.wikiprompt.org/wiki/amazon-web-services), though actual capital collected lagged significantly. By 2021, only $133 million had been received from these pledges.

In 2019, Microsoft invested $1 billion in OpenAI, followed by a $10 billion investment in 2021, and an expanded partnership in 2023 that increased Microsoft's total investment to over $13 billion. These investments were crucial for OpenAI's compute needs, as the company relied on [Microsoft Azure](https://www.wikiprompt.org/wiki/azure) for its supercomputing infrastructure. The 2023 tender offer occurred against this backdrop of escalating AI investment and competition.

## The Tender Offer Details

The tender offer was announced in early 2023, with initial reports suggesting a valuation of $29 billion. However, by the time the deal closed in October 2023, the valuation had surged to $86 billion, driven by OpenAI's revenue growth and the explosive adoption of ChatGPT, which reached 100 million weekly active users within months of its launch. Thrive Capital, led by Josh Kushner, took the lead in structuring the deal, allowing employees to sell shares at a price of approximately $300 per share.

The transaction was notable for its size and the participation of existing investors. Microsoft, which already held a significant stake, reportedly participated in the tender offer, as did other venture firms. The deal provided liquidity to OpenAI's employees, many of whom held stock options that had become highly valuable due to the company's rapid ascent.

## Valuation and Market Impact

The $86 billion valuation made OpenAI one of the most valuable private companies globally, surpassing established firms like IBM and [Salesforce](https://www.wikiprompt.org/wiki/salesforce) in market capitalization. The valuation reflected investor confidence in OpenAI's generative AI technology, which had sparked a wave of investment across the sector. Competitors like [Anthropic](https://www.wikiprompt.org/wiki/anthropic) also saw their valuations rise, with Anthropic raising significant rounds from [Google](https://www.wikiprompt.org/wiki/google) and [Amazon](https://www.wikiprompt.org/wiki/amazon) in subsequent years.

The tender offer also highlighted the growing importance of secondary markets for private company shares, as employees and early investors sought to realize gains without waiting for an IPO. OpenAI's decision to conduct a tender offer rather than a traditional funding round was seen as a way to reward employees while avoiding dilution for new investors.

## Leadership and Governance

The tender offer took place during a period of leadership stability, with [Sam Altman](https://www.wikiprompt.org/wiki/sam-altman) serving as CEO. However, just one month after the deal closed, OpenAI's board removed Altman in a surprise move, citing a lack of confidence. The decision was reversed five days later after a board reconstruction, following pressure from employees and investors, including Microsoft. The incident highlighted governance challenges within the company, which had a unique structure where the nonprofit board controlled the for-profit subsidiary.

The board at the time included [Ilya Sutskever](https://www.wikiprompt.org/wiki/ilya-sutskever), [Greg Brockman](https://www.wikiprompt.org/wiki/greg-brockman), and others, but the firing and reinstatement of Altman led to significant changes in the board's composition. The event also prompted discussions about AI safety and the balance between commercial interests and the nonprofit mission.

## Comparison with Other Funding Rounds

The 2023 tender offer was not OpenAI's first secondary sale. In 2021, the company conducted a similar transaction at a valuation of $29 billion, allowing employees to sell shares to investors like [Sequoia Capital](https://www.wikiprompt.org/wiki/sequoia-capital) and [Andreessen Horowitz](https://www.wikiprompt.org/wiki/a16z). The 2023 deal, however, was significantly larger and occurred at a time when AI investment was surging.

In 2024, OpenAI underwent a restructuring that converted its for-profit subsidiary into OpenAI Group PBC, with the nonprofit OpenAI Foundation retaining a 26% ownership stake. This restructuring was part of a broader trend in the AI industry, where companies sought to balance profit motives with safety and public benefit considerations.

## Employee and Investor Reactions

The tender offer was generally well-received by employees, who saw it as a reward for their contributions to the company's success. Many early employees had joined OpenAI when it was a nonprofit, accepting lower salaries and no stock options, so the liquidity event was particularly meaningful. The deal also attracted new investors who were eager to gain exposure to OpenAI's growth.

However, some observers expressed concerns about the concentration of wealth and the potential for talent attrition, as employees who cashed out might leave the company. In the years following the tender offer, several key researchers, including [Ilya Sutskever](https://www.wikiprompt.org/wiki/ilya-sutskever) and [John Schulman](https://www.wikiprompt.org/wiki/john-schulman), departed to found or join competing AI ventures, citing safety concerns.

## Regulatory and Ethical Considerations

The tender offer occurred amid growing regulatory scrutiny of AI companies. In 2023, the Federal Trade Commission opened an investigation into OpenAI's data collection and privacy practices, and the company faced lawsuits from authors and media outlets over copyright infringement. The high valuation also raised questions about whether AI companies could justify their worth, given the significant costs of training and running large models.

OpenAI's partnership with Microsoft, which included a 49% profit share for Microsoft, was also examined by regulators. The tender offer itself did not raise antitrust issues, but the broader concentration of AI power in a few companies became a topic of public debate.

## Legacy and Aftermath

The $86 billion tender offer marked a turning point in OpenAI's history, cementing its status as a leader in the AI industry. The deal provided the company with a strong financial foundation, enabling it to continue investing in research and development. By 2026, OpenAI's valuation had soared to $852 billion, following a funding round in March 2026, making it one of the most valuable AI companies in the world.

The tender offer also influenced how other AI startups approached fundraising, with many opting for secondary sales to provide liquidity to employees while maintaining control. The event is often cited as a benchmark for the AI boom, which saw massive capital inflows into companies like [Anthropic](https://www.wikiprompt.org/wiki/anthropic), [Figure AI](https://www.wikiprompt.org/wiki/figure-ai), and [Mistral AI](https://www.wikiprompt.org/wiki/mistral-ai).

Despite its success, OpenAI continued to face challenges, including safety concerns, legal disputes, and the departure of key personnel. The company's journey from a nonprofit to a $86 billion valuation in less than a decade underscored the rapid evolution of the AI landscape and the complex trade-offs between innovation, profit, and public benefit.

## External links

- [Wikipedia: OpenAI](https://en.wikipedia.org/wiki/OpenAI)

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Source: https://www.wikiprompt.org/wiki/openai-2023-86b-tender
License: CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/)
Last updated: 2026-10-29T15:58:35.003556+00:00