OpenAI Offers $1.5 Billion Tender Deal to SoftBank, Letting Employees Cash Out Shares

OpenAI Offers $1.5 Billion Tender Deal to SoftBank, Letting Employees Cash Out Shares

Key Points

OpenAI employees can sell $1.5 billion worth of shares in a new tender offer to SoftBank, allowing them to cash out restricted stock units (RSUs).

This deal is part of OpenAI’s recent $6.6 billion funding round, which values the company at $157 billion.

SoftBank’s billionaire CEO, Masayoshi Son, pushed for a larger stake in OpenAI after investing $500 million in its previous round.

What the Deal Entails

OpenAI is allowing current and former employees to sell their shares in a tender offer initiated by SoftBank, giving the Japanese tech conglomerate a larger ownership stake in the AI leader. Employees have until December 24 to decide if they want to sell, with shares priced at $210 per unit, aligning with OpenAI’s recent valuation.

This tender offer allows employees who were granted restricted stock units at least two years ago to cash out some of their holdings. Such offers have become critical for employees of high-growth private companies like OpenAI, as IPO markets remain sluggish and valuations continue to rise.

SoftBank's Growing Bet on AI

The tender offer highlights Masayoshi Son's growing interest in artificial intelligence. SoftBank, through its Vision Fund 2, has heavily invested in AI startups, including Glean, Perplexity, and Poolside. Son previously hinted at saving “tens of billions of dollars” for strategic investments in AI.

SoftBank has a history of backing successful tech firms such as Apple, Qualcomm, Alibaba, and Arm, the semiconductor company it helped take public earlier this year.

OpenAI's Capital-Intensive Growth

Even without SoftBank’s investment, OpenAI has shown strong fundraising capabilities. Over the past two years, OpenAI’s valuation skyrocketed to $157 billion, thanks to funding from Microsoft, Thrive Capital, and Nvidia, among others.

Funding Milestones:

October 2024: OpenAI closed a $6.6 billion funding round.

$4 billion revolving credit line secured, bringing its liquidity to over $10 billion.

Total funding raised: $13 billion.

Financial Performance: OpenAI expects $3.7 billion in revenue this year but forecasts $5 billion in losses, driven by its capital-intensive business model.

Why Tender Offers Matter

Tender offers provide liquidity for employees in private companies with rising valuations and no immediate IPO plans. OpenAI previously restricted employee access to such opportunities, but it reversed those policies in June. Now, current and former employees can participate equally in these offers, reducing internal dissatisfaction.

Other private firms, like Databricks, have also used tender offers to ease pressure to go public while allowing employees to access some of their paper wealth.

AI Competition Heating Up

OpenAI faces growing competition from emerging startups like Anthropic and tech giants like Google and Microsoft. The generative AI market is projected to surpass $1 trillion in revenue within the next decade. In 2024, business spending on generative AI surged 500%, according to Menlo Ventures.

To stay ahead, OpenAI recently launched a search feature within ChatGPT, positioning itself as a competitor to Google, Bing, and AI-focused tools like Perplexity.

Conclusion

SoftBank’s $1.5 billion tender offer deepens its stake in OpenAI, giving employees a rare chance to cash out shares amid a stagnant IPO market. As OpenAI continues its rapid growth and navigates increasing competition, the company is expected to rely on private markets and similar secondary sales to meet investor demand and fuel its capital-intensive business model.