Is OpenAI Worth $100B?

TECH IN THE NEWS

Electioneering - Google will restrict its AI ahead of the election, and Trump threatens Mark Zuckerberg with life in prison if Meta “cheats”.

Kamala Blitz - The Harris campaign plans the biggest digital ad spend in US history, at $370M, and a cabal of crypto execs plan a DC fundraiser.

US Clean-Energy Fund - The $400b fund is fast-tracking projects pre-election fearing a Trump win. It’s recently awarded $1.5b to a solar panel maker, $1.2b to a battery maker, and $861M for solar storage in Puerto Rico.

HP Wins - The US has also awarded HP with $50M from the CHIPS fund for a semiconductor technology project. Meanwhile, the software giant is continuing its $4b damages case against billionaire Mike Lynch’s estate.

Tech Tanks - Major tech stocks’ market values fell last month on AI cost-benefit concerns and recession fears. Drugmaker Eli Lilly and Berkshire Hathaway were August’s big winners.

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THE HOTTEST THING IN TECH
Is OpenAI’s $100B Valuation Justified

OpenAI has been busy. The news cycle appears to be gearing up for something big. In just the past week or two we have had revelations about another fundraise at a $100 billion valuation, the upcoming advanced reasoning “Strawberry” model, a new OpenAI-powered humanoid robot demo going viral, and even talk of a corporate structure rejig.

Welcome to Uncanny Valley

OpenAI-backed startup 1X Technologies just unveiled the GPT-powered NEO Beta, now going viral with many calling it the most realistic AI-powered humanoid yet. It’s so realistic, an X debate raged over whether it was a person in a suit. The bot is designed for everyday home assistance with human-like movement, interaction, and task skills. It does so by utilizing embodied AI to grok its environment and learn from interactions. We are edging ever-closer to affordable AGI-powered in-home robot helper bots.

Strawberry Fields

As early as this fall, the robot could be powered by OpenAI’s most advanced AI model, “Strawberry” (previously Q*). It is said to possess superior reasoning capabilities in solving complex problems. Its’ integration into ChatGPT will unlock an option to give extra “thinking” time for complex tasks. Strawberry will be instrumental in OpenAI’s planned AI agents project “Orion” by automating multi-step tasks more effectively. This potentially advances OpenAI towards Stage 2 of its five-level AGI roadmap. OpenAI reportedly recently demonstrated Strawberry to US Natsec officials.

A $100B Valuation?

OpenAI is reportedly in talks to raise a new funding round at a valuation exceeding $100b, led by Josh Kushner’s Thrive Capital taking a $1b stake, with Microsoft, Nvidia, and Apple also expected to participate. This significant jump from its most recent $86b figure seems justified as investors are already trading shares at values over $100B on the secondaries market

OpenAI’s ARR surpassed $3.b earlier this year with ChatGPT boasting 200M+ weekly active users — double the number from November. It is still projected to lose ~$5b by end of year. That’s because ChatGPT costs $700K per day to run, leading it to spend $8.5b on AI training and staffing. This has even prompted both Microsoft and OpenAI to explore making their own AI chips to remove dependency on Nvidia. This has also led some to speculate whether it makes much sense for Nvidia to invest in OpenAI at all.

Corporate Structure Changes

As it pushes ahead with this massive round OpenAI is now exploring changing its corporate structure to be “more investor-friendly”. Sam Altman reportedly believes it would be more attractive to backers if the current complex non-profit structure was simplified. An option being considered is removing an existing cap on profits for investors in the for-profit subsidiary. At that extended valuation to revenue ratio, it certainly couldn’t hurt.

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2. 🔥 Quant Trading Software Company - New Jersey - Large-scale automated day-trading algorithm designed for volatile U.S. equity markets. Profitable through extensive backtesting and live simulation. Seeking equity investment for software company.

3. Cricket for the Modern World - India - Physical and virtual ecosystem fostering cricket experiences for enthusiasts and upcoming pros. Data-driven, locally proven, globally scaling. (Seed)

4. ⏱️ AI Agent Employees - New York - Sophisticated workflow automation for businesses towards fully autonomous organizations. Previously-exited founder. Backed by Tribe & Kenetic. (Seed)

5. Therapy for Baldness - Los Angeles, CA - Developed by ex-Kythera R&D Leader. Virtual development model and world class team seeking to fund POC study. (Seed)

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TRENDING TOOLS AND BUZZY TECH
Tools

Bland AI - Automated phone call AI agents for enterprises.

Amazon - “Remarkable Alexa” to be powered by Anthropic’s Claude AI.

Nous Research - DisTrO method trains AI on home PC & net connections.

Tech

1 x Robotics - OpenAI-backed 1X Neo beta uncanny human-like bot demo.

Quantum Holograms - Messages can be selectively erased for security.

Coinbase - Executed first AI-to-AI crypto transaction between AI agents.

Health Tech - 1. Google partners with startup Salcit to detect TB with AI. | 2. Lab-grown stem cells are a cancer treatment 'breakthrough'.

DEALS WE’RE WATCHING
Closed Deals:

AI Coding Unicorn - San Fran AI code translator and co-pilot startup Codeium closed a $150M Series C valuing it at $1.25B (up 2x) led by General Catalyst with Greenoaks and Kleiner Perkins joining.

Open Arch Military Tech - Defense tech firm Parry Labs raised $80M led by Capitol Meridian to modernize legacy tech platforms and integrate 3rd-party software with its open architecture for the DoD.

Deals & Companies to Watch:

xAI - Musk’s AI startup’s “Colossus” — “the most powerful AI training system in the world” with 100k Nvidia H100 chips — came online in just 122 days. It is planned to double in size in a few months.

Bland AI - San Fran startup creating AI-driven phone agents for enterprises is blowing up. It’s raised a $16M Series A led by Scale VP, with YC, Max Levchin (Paypal), Jeff Lawson (Twilio), and Eleven Labs’ CTO.

Covariant - Amazon tapped the Bay Area AI robotics startup’s experts and licensed their foundation models for its warehouse automation. It’s most recent raise valued it at $625M.

Funding Buzz Watch:

[Open Fund] Sozo Ventures - California VC firm is targeting a $500M fund IV to back IT startups to expand globally in data, e-commerce, enterprise cloud, fintech IoT, and healthcare IT.

[Open Fund] Amplify.LA - Early-stage LA VC firm targets $60M for a new fund to back consumer, enterprise, fintech, and healthcare startups.

ParaFi Capital - The digital asset manager has raised a $120M fund to acquire GP stakes in crypto funds targeting specific segments or strategies.

Robot Ventures - New York early-stage crypto VC firm raised a fourth fund of $75M from TrueBridge, Haun, Marc Andreessen, and Chris Dixon.