OpenAI went into its latest fundraising talks in late September asking for at least $30 billion in fresh capital at a $1.4 trillion valuation. Some prospective backers balked, and the ChatGPT maker has since scaled back both numbers.
Combined with rival Anthropic's plan to go public at a valuation below what bankers once anticipated, the retreat has unsettled the venture capital industry. Investors who spent the year chasing AI deals are now asking whether private-market valuations are due for a correction, according to a report published by The Spokesman-Review.
OpenAI Lowers Its Sights
OpenAI was most recently valued at $852 billion, and few companies have matched its ability to raise money. After early conversations with interested investors, it set terms that would have lifted its valuation to $1.4 trillion.
According to people familiar with the talks, some investors considered those terms too aggressive. Facing that feedback and weakening market conditions, OpenAI reduced its target valuation to $1.25 trillion and cut the amount it hopes to raise by a third. The company declined to comment.
Anthropic's IPO Comes in Below Expectations
Anthropic is pursuing a public listing at a fully diluted valuation of $1.4 trillion, lower than many had expected. Some bankers had previously estimated the company could command around $2 trillion.
There are signs of renewed optimism. Anthropic's bankers are reportedly considering raising the IPO valuation to $1.5 trillion or higher, and CoreWeave delivered an upbeat earnings report this week. Even so, the revised figure would remain well short of earlier projections.
Investors Start Recalibrating
Tomasz Tunguz, a general partner at Theory Ventures, said investors have started using more conservative revenue multiples in AI funding talks, a change he has noticed only in the past two weeks.
Howard Morgan, co-founder and general partner at B Capital, said he is advising many startups to aim for lower valuations than they had planned, pointing to the two AI leaders as a key reason. He described companies hoping for valuations in the high single-digit or double-digit billions while generating little or no revenue, and said investors are now telling them those numbers are too high.
If that caution holds, it would mark a sharp turn from earlier this year, when venture firms sent unsolicited term sheets to promising founders, backed unproven ideas with minimal revenue, and sometimes marked up startups within days of their previous rounds.
A Growing List of Risks
The pullback comes as the venture world faces several new pressures at once. These include a weeks-long selloff in public AI stocks, the possibility of higher interest rates, and a scandal at Nvidia, a major investor across the AI sector.
Politics is also a factor. The Democratic sweep in the US midterm elections is expected to make it harder to build data centers and secure the computing capacity that AI services depend on.
Why Two Companies Carry So Much Weight
OpenAI and Anthropic have done more than any other startups to shape the current AI boom, both through their models and through a dense network of deals with chipmakers, cloud providers and other partners. Data from Bloomberg Intelligence released in October showed the pair on track to account for more than a third of all startup capital invested worldwide.
That concentration means any sign of tighter funding or weaker valuations at either company could spread across the sector. "Anthropic going public is almost like a whole ecosystem going public," said Jai Das, president and partner at Sapphire Ventures.
Das said a smooth listing, expected next week, followed by steady share gains would keep the AI trade on course. A poor debut, he warned, could push some companies out of business. In the meantime, many startups weighing IPOs or other deals are waiting until after Anthropic's listing to move.
What Founders Should Take From the Shift
For now, early-stage investors are urging caution. Eric Bahn, a partner at Hustle Fund, said his firm is telling founders to raise whatever capital they can as quickly as possible and keep spending under control for the coming year.
Alexa von Tobel, managing partner at Inspired Capital, has likewise encouraged portfolio companies not to delay fundraising, arguing that cash becomes the most valuable asset when a correction looms. For founders, the message is that the easy money of the past year may not last, and the terms set by AI's biggest players will likely shape what everyone else can raise.
Source: The Spokesman-Review
