OpenAI Rushing $30 Billion Funding Round Before Anthropic's IPO

Games CFOs play. Both Anthropic and OpenAI are planning to go public in the next half year. They use different methods to quantify their financial results, but both are in the $50 to 70 billion annualized revenue range and have leapfrogged each other by increments of $5 billion, more or less. Both would like their IPO to be larger than the other, with the relative valuations at $1.4 to 2 trillion. 

Since they are essentially the only two horses in this race, it is not really clear to what degree such sophomoric supremacy claims matter. The same sovereign wealth funds and other ultra-wealthy sources of capital are investing in both. And it is not clear that either AI or customers will really care, either. But this is personal. OpenAI was first and has been stung by reports that Anthropic's models are preferred by businesses and other tech companies, inferring that OpenAI is the less operationally sophisticated 'public' model. That OpenAI is now trying to land a funding round in hopes it will diminish interest in Anthropic's IPO seems fanciful and, frankly, desperate, especially given OpenAI's legendary cash burn rate. JL

Cris Tolomia reports in Quartz:

OpenAI is rushing to line up investor backing for a $30 billion funding round ahead of rival Anthropic's anticipated stock market listing in mid-November. The round could value OpenAI at more than $1.4 trillion. Both companies are drawing on a similar pool of investors. Some investors read OpenAI's fundraising drive as a bid to secure money from funds that could otherwise put more toward Anthropic's IPO. OpenAI wants to close the round before Anthropic's financial disclosures invite side-by-side comparisons of the two businesses, putting OpenAI under pressure to explain how fast revenue is growing. OpenAI is telling investors that revenue on an annualized basis hit $50 billion and that it projects $70 billion by the close of the year. Anthropic's annualized revenue stood at around $65 billion in July

OpenAI is rushing to line up investor backing for a roughly $30 billion funding round ahead of rival Anthropic's anticipated stock market listing in mid-November, according to Reuters. The round could value OpenAI at more than $1.4 trillion, according to Reuters. 

SoftBank Group, Abu Dhabi-based MGX and other current OpenAI investors are negotiating to participate in the round, according to Reuters. OpenAI and SoftBank declined to comment to Reuters.

OpenAI met last week with sovereign wealth funds and long-only funds, while Anthropic ran an investor day of its own, according to Reuters. Both companies are drawing on a similar pool of investors. Some investors read OpenAI's fundraising drive as a bid to secure money from funds that could otherwise put more toward Anthropic's IPO, according to Reuters. 

OpenAI is telling investors that revenue on an annualized basis hit $50 billion following the debut of its GPT-6 Astra model, and that it projects $70 billion by the close of the year, according to Reuters. OpenAI has lowered the prices of its less expensive models, a move it says has driven greater usage, according to Reuters.

Anthropic's annualized revenue stood at around $65 billion in July, according to Reuters. Anthropic informed investors that revenue for the third quarter climbed to $16.8 billion, versus $11.6 billion during the second quarter, according to Reuters. Some current and potential Anthropic investors have pushed for a listing valuation of about $1.5 trillion, not the $2 trillion the company is seeking, after those results missed expectations, according to Reuters.

The two companies tally their revenue in different ways. OpenAI books revenue after deducting partner shares, and it has charged that Anthropic overstates its revenue by recording the entire value of contracts sold via third-party cloud providers, according to Reuters. Anthropic has told Reuters that its bookkeeping adheres to widely accepted methods. 

OpenAI wants to close the round before Anthropic's financial disclosures invite side-by-side comparisons of the two businesses, according to Reuters. The disclosures could also put OpenAI Chief Financial Officer Sarah Friar under pressure from investors to explain in greater depth how fast revenue is growing and what the outlook looks like, according to Reuters.

"OpenAI could want to set its own valuation and not have to worry about a comp (comparison)," Edward Best, co-chair of capital markets at Willkie Farr & Gallagher, told Reuters. Best has no role in the deal and was speaking hypothetically. “It’s really a two-horse race in terms of being public,” he said, according to The Next Web.

OpenAI had told investors earlier this month that it expects annualized revenue of $70 billion or more by the end of 2026, up from about $50 billion at the end of September. At that point no term sheet had been finalized for the new round, which OpenAI had discussed at a $1.4 trillion pre-money valuation. OpenAI's most recent raise was a $122 billion round that closed in March at a valuation of $852 billion. 

OpenAI filed its prospectus confidentially in June and is targeting a 2027 listing. OpenAI CEO Sam Altman has ruled out a 2026 debut. The new capital would give OpenAI money to cover its infrastructure obligations and shore up its balance sheet should a softer IPO environment push back the listing, according to Reuters.