OpenAI rushing to raise $30 billion before Anthropic’s IPO. What is at stake?

OpenAI wants to secure billions of dollars from investors before its biggest rival, Anthropic, gets a chance to make its case to the public markets, Reuters reported on Tuesday.

The ChatGPT maker is speeding up talks for a funding round of about $30 billion that could value it at more than $1.4 trillion, the report said. OpenAI is aiming to secure investor commitments before Anthropic’s expected stock market debut in mid-November.

Existing backers, including Japan’s SoftBank Group and Abu Dhabi-based MGX, are in talks to participate in the round, according to the report.

Why does OpenAI want to move first?

Both companies are competing for money from investors who may have to choose how much capital to commit to each business.

Anthropic is preparing for a potential initial public offering (IPO), in which a company sells shares to the public for the first time. Its planned listing could give investors a more detailed view of its finances and provide a direct basis for comparing the two AI developers.

OpenAI wants to complete its fundraising before those disclosures invite closer comparisons between the companies, the report said.

The timing also matters because investors are becoming more cautious about the high valuations attached to AI companies. Rising bond yields, volatile technology stocks and questions about the cost of building AI infrastructure have made it harder for businesses to assume that investors will keep funding expansion at any price.

More from Business

By securing commitments now, OpenAI could bring in fresh capital before investors reassess how much they are willing to pay for AI businesses.

OpenAI points to revenue growth

OpenAI is making the case that its growing business supports a higher valuation.

The company has told investors that its annualised revenue reached $50 billion following the launch of its GPT-6 Astra model. It expects that figure to rise to $70 billion by the end of the year, according to the report.

Annualised revenue is an estimate of what a company would earn over a full year if its current pace of revenue continued. It is not the same as revenue already earned during that year.

OpenAI has also cut prices on some of its cheaper AI models, saying this has helped increase usage. The company has told investors it could reduce prices further.

Lower prices could attract more users and businesses, but they can also put pressure on how much money a company earns from each customer. Investors will need to assess whether rising usage can translate into sustainable revenue growth.

OpenAI was valued at $852 billion in March, after a funding round that included $122 billion in committed capital. A valuation above $1.4 trillion would mark a substantial increase in just a few months.

Anthropic is also growing fast

Anthropic is entering the fundraising race with strong revenue growth of its own.

The company told prospective investors that its revenue rose to $16.8 billion in the third quarter from $11.6 billion in the second quarter, as reported by Reuters. It also said it was profitable on an adjusted basis during the third quarter.

Its annualised revenue had reached roughly $65 billion by July, Reuters previously reported.

But the pace of monthly revenue growth has raised questions about how much investors should pay for the business. Some existing and prospective investors have discussed a valuation of around $1.5 trillion for Anthropic’s expected IPO, below the roughly $2 trillion valuation previously sought.

OpenAI has also challenged how Anthropic reports revenue from contracts sold through third-party cloud providers. OpenAI records revenue after deducting partners’ shares, while it has accused Anthropic of counting the full value of such contracts. Anthropic has said it follows established accounting practices.

These differences could make comparisons between the two companies more complicated, even as investors try to decide which business offers the stronger growth prospects.

What is at stake for investors?

The immediate question is whether OpenAI can secure funding at its proposed valuation before Anthropic’s IPO gives investors more information to assess the rival company.

For investors, the challenge is to judge whether the companies’ rapid growth can justify valuations running into trillions of dollars. Revenue growth matters, but so do the costs of developing AI models, operating data centres and securing the computing power needed to serve more users.

The risks are becoming harder to ignore. AI infrastructure companies have faced pressure as investors examine the borrowing needed to finance data centres. Several companies have also delayed or paused planned stock market listings amid market volatility and concerns about valuations.

OpenAI needs capital to meet its infrastructure commitments and strengthen its finances if weaker IPO markets delay its planned 2027 listing, Reuters reported.

The outcome of the fundraising race could therefore affect more than the two AI developers. It could also offer a signal of how much investors are willing to pay to participate in the next phase of the AI boom.

If OpenAI secures the money at its targeted valuation, it would strengthen its ability to finance expansion without immediately relying on public markets. If investors become more cautious, the company may face tougher questions about its revenue outlook, spending and valuation.

With inputs from agencies.