An AI company with an appraisal value of over 3.7 trillion yen OpenAI may pay more than 13 trillion yen to Microsoft

Microsoft envisions incorporating ChatGPT, an interactive AI, and DALL-E2, an image generation AI, into its own products and services, and has already invested $3 billion (approximately 390 billion yen) and is reportedly considering investing another $10 billion (about 1.3 trillion yen). Fortune, an American business magazine, explains how such OpenAI will distribute profits in the future.

Inside the structure of OpenAI's looming new investment from Microsoft and VCs | Fortune

OpenAI was originally founded as a non-profit organization, but in 2019 OpenAI went from a non-profit to a limited commercial organization. Immediately after that, Microsoft partnered with OpenAI and invested 1 billion dollars (about 110 billion yen at the rate at that time).

Microsoft invests more than 100 billion yen in OpenAI for general artificial intelligence (AGI) development - GIGAZINE

And by incorporating ChatGPT and DALL-E 2 into the search engine Bing, Microsoft plans to take away the share of Google, the largest search engine at the time of writing the article, and consider investing a further 10 billion dollars. It was reported that

Microsoft is considering investing $ 10 billion to integrate OpenAI's ChatGPT into Bing and Office - GIGAZINE

Microsoft's bet on OpenAI appears to be even bigger than previously known, with internal documents suggesting that Microsoft has already put $3 billion into the company ahead of the deal. . It is reported that Microsoft has invested $ 1 billion (about 130 billion yen) so far, but in fact it has invested three times that amount. In that case, Microsoft will invest a total of 13 billion dollars (about 1.7 trillion yen) in OpenAI, clarifying how important the technology behind ChatGPT and DALL-E 2 is to Microsoft's future is shown.

Regarding OpenAI's profits, Microsoft will receive preferential treatment as reported so far. The internal document describes the refund of profits earned by OpenAI, and it is said that it will be refunded to 'OpenAI's first close partner (FCP)' first. It is unknown who this FCP refers to, but it is believed to be an investor who has supported OpenAI from the beginning. And once you've finished reimbursing FCP, the profits will be paid to Microsoft from there.

For the profit stream of OpenAI, FORTUNE shows the following diagram.

Each item shown in the above figure is as follows.
1: Initially 100% paid to FCP.
2: After paying the principal of the investment amount to FCP, pay caps to employees and FCP with 25% of the profit.
3: The remaining 75% will be refunded to Microsoft.
4: After paying the amount invested in Microsoft, 2% will belong to OpenAI.
5: 41% paid to employees and 8% paid to FCP as a cap .
6: All remaining 49% will be paid to Microsoft.
7: After paying everything, all profits belong to OpenAI, and OpenAI becomes a for-profit organization.

Profit sharing is quite favorable for Microsoft, but it is expected that it will take a long time before Microsoft can receive profits. According to one source, $92 billion in profits and $13 billion in initial investment were returned to Microsoft, while other investors earned $150 billion. All shares will be returned to OpenAI.

OpenAI expects $1 billion in revenue in 2024, but it's unclear how much the expenditure will cost. According to internal documents, OpenAI expected the cost in 2022 to be about $ 544.5 million (about 70 billion yen). As a result, former Microsoft chairman Bill Gates warned CEO Satya Nadella that he should stop investing in OpenAI.

On the other hand, OpenAI is negotiating to sell existing shares through a public tender offer. The valuation of OpenAI is expected to be about $ 29 billion (about 3.74 trillion yen), and you can see that not only Microsoft but the entire market appreciates OpenAI.

Sam Altman, CEO of OpenAI, evaluates the company's AI development as ``the most important technological development in human history'', and CEO Nadella also said that OpenAI has a sufficiently wide range of application and strong generalization ability like humans. I expect that it may be the first company to develop a ' general artificial intelligence ' that possesses. It will take some time for Microsoft to find out if its $13 billion investment in OpenAI was a success.

in Note,   Software, Posted by log1i_yk