Synopsis
ChatGPT maker OpenAI is offering private equity firms a guaranteed 17.5% return. This move aims to form joint ventures and boost enterprise AI adoption. Rival Anthropic is also seeking similar partnerships. Some firms are hesitant due to economic concerns. OpenAI expects its venture to become profitable through implementation services and product revenue.The two companies are battling for more lucrative business customers to use AI as they race to position themselves for potential public listings as early as this year. The joint venture structure could absorb high upfront costs associated with deploying engineers to customize models for clients, easing cost pressures on OpenAI and Anthropic ahead of going public, and providing clearer segment reporting that can support the IPO narrative, two of the people familiar with the discussions said.
OpenAI and Anthropic are racing to snap up similar types of partnerships with PE firms, a strategy that is new to the AI sector. "There's a big race to lock in as much enterprise, as many desks as possible," said Matt Kropp at Boston Consulting Group's AI unit, adding that once a company has a customized AI model integrated into its systems, it becomes much harder to switch to a competitor.
"I can see that there's a huge amount of scalability there."
OpenAI, TPG and Advent declined to comment. Anthropic did not respond to a request for comment.
NOT FOR EVERYONE At least two private-equity firms decided not to participate in either of the two joint ventures, citing concerns about the economics, flexibility and profit profile of the partnerships, two people said.
Thoma Bravo, one of the world's largest software-focused buyout firms, decided not to participate after internal discussions led by managing partner Orlando Bravo, a person familiar with the decision said. Bravo raised questions about the long-term profit profile of joint ventures with OpenAI and Anthropic, adding that many of its portfolio companies are already deploying AI tools, the person said. Thoma Bravo declined to comment. Some private-equity investors questioned the partnerships, arguing that large private-equity firms already have direct access to OpenAI and Anthropic without committing capital. These people said the partnerships also reflect pressure on buyout firms from their own investors to demonstrate a clearer strategy around AI. They noted that with technology valuations down, such joint ventures may not materially change access to AI tools or generate additional revenue. Any meaningful upside, they added, would likely depend on securing board seats, equity stakes or other economic terms only available to lead partners.
Other private-equity firms are in talks with OpenAI and Anthropic about participating in the joint ventures, though many are expected to take smaller stakes without board seats or lead roles, four of the people said.
SWEETENERS The investment also includes seniority over other joint venture partners and downside protection, the sources said, with more private-equity firms in discussions to invest smaller amounts in the joint venture. OpenAI expects its joint venture to become profitable, supported by strong demand for its AI tools and the engineers who deploy them, a source familiar with its financial plans said. The partnership will make money by charging for implementation services, taking a share of revenue from products it develops and deploys, and co-owning new products it creates, the source added. Reuters previously reported that OpenAI is in advanced talks with firms including TPG, Bain Capital, Advent International and Brookfield Asset Management to raise about $4 billion at a pre-money valuation of roughly $10 billion.
Anthropic, which has gained traction among businesses, is pursuing a similar strategy and has been courting private equity firms including Blackstone, Hellman & Friedman and Permira for its own enterprise-focused venture, Reuters previously reported.
