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, can present its business to public market investors, Reuters reported on Tuesday.

The company behind ChatGPT is speeding up talks to raise about $30 billion. The deal could value OpenAI at more than $1.4 trillion, according to the report. OpenAI wants investors to promise their money before Anthropic is expected to sell shares on the stock market in mid-November.

Current investors, including Japan's SoftBank Group and MGX, based in Abu Dhabi, are in talks to take part in the funding round, the report said.

Why does OpenAI want to move first?

Both companies are competing for money from investors. Some investors may need to decide how much money to put into each company.

Anthropic is preparing for a possible initial public offering (IPO). This is when a company sells shares to the public for the first time. Its planned stock market launch could give investors more details about its finances and help them compare the two AI companies directly.

OpenAI wants to finish raising money before Anthropic shares more information that could lead investors to compare the two companies more closely, the report said.

The timing also matters because investors are becoming more careful about the high prices placed on AI companies. Bond yields are rising, technology stocks are moving up and down, and people are questioning how much it costs to build the systems that power AI. These factors make it harder for companies to assume investors will keep providing money for growth at any price.

By getting investors to promise money now, OpenAI could bring in new funds before investors rethink how much they are willing to pay for AI companies.

OpenAI points to revenue growth

OpenAI is arguing that its growing business supports a higher company value.

The company has told investors that its yearly revenue rate reached $50 billion after it launched its GPT-6 Astra model. It expects this figure to reach $70 billion by the end of the year, according to the report.

Annualised revenue is an estimate of how much money a company would earn in a full year if it continued earning money at its current rate. It does not mean the company has already earned that amount during the year.

OpenAI has also lowered prices for some of its cheaper AI models and says this has helped more people use them. The company has told investors it could cut prices even further.

Lower prices may attract more people and businesses, but they can also reduce how much money the company makes from each customer. Investors will need to decide whether more use of its products can lead to lasting revenue growth.

OpenAI was valued at $852 billion in March, after a funding round that included $122 billion in promised investment. A value of more than $1.4 trillion would be a major increase in just a few months.

Anthropic is also growing fast

Anthropic is also competing for investment and has seen strong revenue growth.

The company told potential investors that its revenue rose from $11.6 billion in the second quarter to $16.8 billion in the third quarter, Reuters reported. It also said it made a profit in the third quarter after certain items were adjusted for.

Reuters had previously reported that Anthropic's annualised revenue had reached about $65 billion by July.

However, the speed of its monthly revenue growth has raised questions about how much investors should pay for the company. Some current and potential investors have discussed a value of about $1.5 trillion for Anthropic's expected IPO. That is lower than the roughly $2 trillion valuation the company had previously sought.

OpenAI has also questioned how Anthropic reports money earned from contracts sold through outside cloud computing providers. OpenAI counts revenue after taking away the share paid to its partners. It has accused Anthropic of counting the full value of these contracts instead. Anthropic has said its method follows accepted accounting rules.

These differences could make it harder to compare the two companies, even as investors try to decide which one has better chances of continued growth.

What is at stake for investors?

The main question right now is whether OpenAI can secure funding at the value it wants before Anthropic's IPO gives investors more information about its rival.

Investors must decide whether the companies' fast growth can support values of trillions of dollars. Revenue growth is important, but so are the costs of developing AI models, running data centres and getting enough computing power to serve more users.

The risks are becoming harder to ignore. Companies that build AI infrastructure have come under pressure as investors look more closely at the loans and other borrowing needed to pay for data centres. Several companies have also delayed or paused planned stock market launches because of market swings and worries about company valuations.

OpenAI needs money to meet its infrastructure commitments and improve its financial position if a weaker market for IPOs delays its planned 2027 stock market launch, Reuters reported.

The result of this race to raise money could affect more than the two AI companies. It could also show how much investors are willing to pay to take part in the next stage of the AI boom.

If OpenAI raises the money at the value it is targeting, it will be in a stronger position to pay for growth without immediately needing money from public markets. If investors become more careful, the company may face harder questions about its expected revenue, spending and valuation.

With information from news agencies.