OpenAI hands staff $7 billion cash exit as IPO timeline slips

OpenAI bought back $7 billion of shares from current and former employees at a valuation of $852 billion. The buyback gives its workers a cash exit while the company mulls a public listing it confidentially filed for in June.

Why OpenAI’s buyback lands before the IPO

The stock purchase, disclosed on August 10, gives OpenAI employees a way to cash out paper equity without waiting for a stock market launch. Much of the staff pay is in shares they cannot easily sell. A company tender is one of the few ways to get liquidity before a listing ties them down with IPO constraints.

The size of the tender offer suggests that a public offering is not imminent. In June, OpenAI filed confidentially with the Securities and Exchange Commission (SEC) to keep the option open for later this year.

Companies are staying private much longer than the last generation of startups, choosing to implement secondary sales.

The $852 billion values the company at the same level as OpenAI’s March funding round, led by SoftBank with a $122 billion investment. Andreessen Horowitz, D.E. Shaw Ventures, MGX, TPG, T. Rowe Price, Amazon, Nvidia, and Microsoft all participated.

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