When a startup seeks a large round of financing, meetings are usually organized with venture capitalists at which the founders pitch their business idea. At the end of 2023, when OpenAI was looking to raise $300 million from investors, CEO Sam Altman took a different approach. In a group video call, he presented a handful of high-profile venture capitalists, including Sequoia, Lightspeed and NEA, with an offer they could either accept or reject and let them discuss it among themselves.
A VC partner whose firm had previously backed Altman companies and who was on the call thought he had clicked on the wrong link when he found himself at a virtual table with his closest competitors. “I thought, ‘This is surreal,’” the investor said. The offer on the table was also unconventional. Each participant could participate in OpenAI at a post-money valuation of $29 billion. The return was limited to three times the investment amount and the conditions were non-negotiable. Altman said this transaction structure would protect OpenAI from undue influence and allow the company to work for the good of humanity.
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“I thought, ‘Try again,’” the investor said. “Altman likes to act altruistic, but I would prefer if he told me his true intentions.” His VC firm wasn't happy with the deal structure, with limited upside and no loss limits, and was put off by Altman's Shark Tank-style pitch. They declined the offer but watched as competitors scrambled to write checks. Even those who had expressed dislike for Altman in the past.
Investors are fighting back, but only half-heartedly
This is one of several stories Business Insider US learned during a reporting trip through Silicon Valley. In some parts of this club world, over seven dollar coffees and handcrafted cocktails, the meteoric rise of OpenAI and Sam Altman is leading to an inevitable backlash.
Source: https://www.businessinsider.de/gruenderszene/perspektive/openai-altmann-hype-ende/
