# OpenAI 2023 Tender Offer

The OpenAI 2023 Tender Offer was a secondary share sale led by Thrive Capital that valued OpenAI at $86 billion, allowing employees to cash out equity while the company remained private.

The OpenAI 2023 Tender Offer was a secondary market transaction completed in early 2023, through which existing shareholders of OpenAI sold their shares to new investors. The deal was led by Thrive Capital, a venture capital firm, and valued the company at approximately $86 billion post-money. This event marked a significant milestone in OpenAI's corporate history, as it provided liquidity to employees and early investors while the company continued to operate as a private entity.

The tender offer was part of a broader trend in the artificial intelligence industry, where rapid advances in [large language models](https://www.wikiprompt.org/wiki/large-language-model) and [generative AI](https://www.wikiprompt.org/wiki/generative-ai) attracted substantial investor interest. OpenAI, known for its [GPT](https://www.wikiprompt.org/wiki/openai) series and the [AI](https://www.wikiprompt.org/wiki/artificial-intelligence) chatbot ChatGPT, had seen explosive growth in usage and revenue following the public release of ChatGPT in November 2022. The valuation of $86 billion represented a substantial increase from previous funding rounds, reflecting the market's confidence in OpenAI's technology and commercial prospects.

## Background and Context

OpenAI was founded in December 2015 as a nonprofit organization with the mission of ensuring that [artificial general intelligence](https://www.wikiprompt.org/wiki/artificial-general-intelligence) benefits all of humanity. The founding team included Elon Musk, Sam Altman, Ilya Sutskever, and Greg Brockman, among others. In 2019, the organization transitioned to a "capped" for-profit structure, creating OpenAI LP and later OpenAI Global, LLC, to attract investment while maintaining a nonprofit parent. Microsoft invested $1 billion in 2019, and subsequent investments brought its total to over $13 billion.

By 2023, OpenAI had become a leader in the AI field, with its GPT-3 and GPT-4 models powering a wide range of applications. The company's revenue grew rapidly, driven by enterprise adoption and consumer subscriptions. However, the company also faced significant costs, particularly in computing infrastructure, which relied heavily on [Microsoft Azure](https://www.wikiprompt.org/wiki/azure) and [Nvidia](https://www.wikiprompt.org/wiki/nvidia) GPUs. The tender offer was seen as a way to reward early employees and investors while raising additional capital for expansion.

## The Tender Offer Process

Tender offers in private companies typically involve a lead investor purchasing shares from existing shareholders at a predetermined price. In this case, Thrive Capital, founded by Joshua Kushner, agreed to buy shares from OpenAI employees and early investors. The transaction was structured as a secondary sale, meaning the company itself did not issue new shares, but rather existing shares changed hands. This allowed OpenAI to provide liquidity without diluting existing shareholders.

The offer price implied a valuation of $86 billion, which was a significant premium over the company's previous valuation of around $29 billion in 2021. The deal was oversubscribed, with strong demand from institutional investors. Thrive Capital was joined by other investors, including [Microsoft](https://www.wikiprompt.org/wiki/microsoft), which had a pre-existing relationship with OpenAI. The exact terms of the deal, including the number of shares sold and the total amount raised, were not publicly disclosed, but reports suggested that employees could sell up to a certain percentage of their shares.

## Valuation and Market Impact

The $86 billion valuation placed OpenAI among the most valuable private companies in the world, alongside firms like SpaceX and Stripe. It reflected the market's belief in the transformative potential of AI, particularly in the wake of ChatGPT's success. The valuation also had implications for the broader AI industry, as it set a benchmark for other AI startups, including [Anthropic](https://www.wikiprompt.org/wiki/anthropic) and [Google DeepMind](https://www.wikiprompt.org/wiki/google-deepmind).

Investors were attracted by OpenAI's revenue growth, which reportedly reached $1.3 billion annually by late 2023, and its dominant position in the generative AI market. The company's partnerships with Microsoft, which integrated OpenAI's models into its products, provided a stable revenue stream. However, some analysts expressed concerns about the high valuation, citing the costs of training and running large models, as well as potential regulatory challenges.

## Key Participants

The tender offer was led by Thrive Capital, which had previously invested in OpenAI. Other participants included existing investors such as [Microsoft](https://www.wikiprompt.org/wiki/microsoft), [Sequoia Capital](https://www.wikiprompt.org/wiki/sequoia-capital), and [Andreessen Horowitz](https://www.wikiprompt.org/wiki/andreessen-horowitz). The deal also attracted new investors, including sovereign wealth funds and pension funds, although their identities were not fully disclosed. OpenAI's leadership, including CEO Sam Altman and President Greg Brockman, supported the transaction as a way to retain talent by offering employees a financial reward for their contributions.

Employees who participated in the tender offer were subject to certain restrictions, such as a lock-up period during which they could not sell additional shares. The company also implemented a policy requiring employees to hold a minimum amount of equity, to align their interests with the company's long-term success.

## Aftermath and Subsequent Developments

The 2023 tender offer was followed by further fundraising activities. In early 2024, OpenAI raised additional capital at a valuation of around $100 billion, and by March 2026, the company closed a funding round with a post-money valuation of $852 billion, making it one of the most valuable AI companies in the world. The tender offer also had implications for OpenAI's corporate governance, as it increased the influence of outside investors.

In November 2023, shortly after the tender offer, OpenAI's board removed Sam Altman as CEO, citing a lack of confidence, but reinstated him five days later after a board reconstruction. This event highlighted the tensions between the nonprofit mission and the for-profit structure. The tender offer also drew scrutiny from regulators, who examined whether the valuation was fair and whether employees were adequately informed about the terms.

## Comparisons to Other AI Companies

The OpenAI 2023 tender offer was part of a broader trend of high valuations in the AI sector. [Anthropic](https://www.wikiprompt.org/wiki/anthropic), a competitor founded by former OpenAI employees, raised billions of dollars at valuations exceeding $20 billion. [Google DeepMind](https://www.wikiprompt.org/wiki/google-deepmind), a subsidiary of Alphabet, continued to invest heavily in AI research. The tender offer underscored the intense competition for talent and capital in the field, as companies sought to develop more powerful [neural networks](https://www.wikiprompt.org/wiki/neural-network) and [transformer](https://www.wikiprompt.org/wiki/transformer) models.

Unlike traditional initial public offerings (IPOs), tender offers allow private companies to provide liquidity without the regulatory burdens of going public. This approach became increasingly popular among tech companies, including SpaceX and Stripe. For OpenAI, the tender offer was a strategic move to balance the interests of employees, investors, and the nonprofit mission.

## Criticism and Controversy

The tender offer was not without controversy. Some critics argued that the $86 billion valuation was inflated, given that OpenAI's revenue was still relatively small compared to its costs. Others raised concerns about the concentration of ownership, as a small group of investors gained significant influence over the company. Additionally, the deal was criticized for potentially exacerbating income inequality, as it primarily benefited well-compensated employees and wealthy investors.

OpenAI also faced legal challenges related to its AI models, including lawsuits over copyright infringement and alleged harms caused by its chatbots. These issues did not directly affect the tender offer, but they added to the uncertainty surrounding the company's future.

## Legacy and Significance

The OpenAI 2023 tender offer was a landmark event in the history of AI commercialization. It demonstrated the immense financial value of generative AI and helped to fuel the AI boom that continued through the mid-2020s. The deal also highlighted the challenges of balancing profit and mission in a public benefit corporation, a model that OpenAI adopted in its 2025 restructuring.

As of 2026, OpenAI remains a private company, although it filed for an initial public offering in June 2026. The tender offer set a precedent for other AI companies, which increasingly used secondary sales to provide liquidity to employees. It also contributed to the growing debate about the societal impact of AI, as the technology became more powerful and pervasive.

In summary, the OpenAI 2023 tender offer was a pivotal financial event that reflected the rapid growth of the AI industry and the high stakes involved in developing advanced AI systems. It provided a significant return for early investors and employees, while positioning OpenAI for continued expansion in the years ahead.

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Source: https://www.wikiprompt.org/wiki/openai-2023-htc
License: CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/)
Last updated: 2026-09-12T16:22:24.561858+00:00