OpenAI becomes world’s most valuable private company at $500B

OpenAI has become the world’s most valuable private company at $500 billion, surpassing SpaceX and ByteDance following a secondary share sale that raised $6.6 billion from investors including SoftBank and Abu Dhabi’s MGX fund. This milestone solidifies OpenAI’s position as the dominant force in the AI industry while setting the stage for its controversial transition from nonprofit to a Public Benefit Corporation structure.

The big picture: OpenAI’s valuation jump from $300 billion to $500 billion reflects unprecedented investor confidence in AI technology and the company’s market leadership.

• The secondary sale allowed current and former employees to sell their shares, with OpenAI initially authorizing $10.3 billion in sales but ultimately completing $6.6 billion.
• SpaceX, Elon Musk’s space exploration company, previously held the title of world’s most valuable startup at $400 billion, while TikTok creator ByteDance sits at $220 billion.

Key details: The funding round included major institutional investors betting heavily on OpenAI’s future growth prospects.

• Investors included SoftBank, Abu Dhabi government’s MGX fund, American investment firm Thrive Capital, and global investment management firm T. Rowe Price.
• The secondary share structure allowed existing stakeholders to monetize their equity without diluting the company’s ownership structure.

Why this matters: OpenAI’s massive capital requirements align with CEO Sam Altman’s ambitious infrastructure plans that demand unprecedented funding levels.

• Altman has previously stated his intention to spend “trillions of dollars” building data centers to support AI services.
• The company’s transition to a Public Benefit Corporation would remove caps on investor returns, making it more attractive to potential backers.

Corporate restructuring controversy: OpenAI’s planned shift from nonprofit to for-profit structure has sparked legal challenges from co-founder Elon Musk.

• The company announced in early September it was moving closer to becoming a Public Benefit Corporation controlled by its nonprofit arm.
• OpenAI’s nonprofit division received an equity stake worth more than $100 billion, making it a major shareholder in the new structure.
• Musk, who co-founded OpenAI and funded its initial operations, is attempting to block the transition in court, claiming OpenAI and Altman are violating their founding mission of building AI “for the benefit of humanity.”