OpenAI Startup Fund quietly raises $15M

OpenAI Startup Fund raises $15M in a new tranche, managed by Ian Hathaway.

: The OpenAI Startup Fund has recently closed a $15 million funding round from two unnamed investors, aimed at supporting AI-focused startups in various sectors. This investment was made into a special purpose vehicle associated with the fund, marking the second instance of such funding, following a $10 million tranche in February. The fund, once under the control of OpenAI CEO Sam Altman, is now managed by Ian Hathaway, amidst scrutiny over potential conflicts of interest.

The OpenAI Startup Fund, while operating separately from OpenAI, focuses on investing in startups that leverage AI technology across fields such as education, law, and the sciences. It recently secured a $15 million investment from two undisclosed investors, which was directed into OpenAI Startup Fund SPV II, L.P., a special purpose vehicle designed for this investment. This setup allows for pooling resources for targeted investments, potentially opening the door to a broader array of investors beyond traditional institutional ones. The fund's operations and investment strategies, particularly the use of SPVs, underscore the versatility and strategic approaches being employed to foster innovation within the AI domain.

Previously, the fund came under criticism when it was disclosed that Sam Altman, OpenAI's CEO, had significant control over the fund's decisions and investment directions. This raised concerns about potential conflicts of interest, given the close ties between the fund, Altman, and major OpenAI investors like Microsoft. In response to these criticisms and to mitigate concerns, control of the fund was transferred to Ian Hathaway, an experienced venture capitalist, indicating a move towards more traditional fund management practices while aiming to maintain a focus on revolutionary AI technologies and startups.

As of the last reporting period, the OpenAI Startup Fund had commitments totaling $175 million and a gross net asset value of $325 million, supporting over a dozen startups across various sectors of technology and innovation. These investments, including into companies like Descript, Speak, and Mem, illustrate the fund's commitment to nurturing groundbreaking AI applications and platforms. The fund's activities, especially in the light of recent governance changes, reflect a continued emphasis on transparency, ethical investment practices, and the strategic promotion of AI technologies that promise to reshape industries.