Another roundabout investment! OpenAI acquires a stake in a platform owned by its investor

According to foreign media reports, OpenAI will take a stake in Thrive Holdings, an investment vehicle established earlier this year by Thrive Capital, further expanding the growing cycle of circular transactions between the ChatGPT developer and its investors.

As one of OpenAI's main investors, Thrive Capital established Thrive Holdings this year with the goal of founding and acquiring businesses that can benefit from AI. According to the partnership announced on Monday, OpenAI will collaborate with Thrive Holdings to accelerate enterprise adoption of AI, with the initial focus areas being accounting and information technology services.

An OpenAI spokesperson stated that the company has not invested in Thrive Holdings. Instead, OpenAI will exchange opportunities for companies under Thrive Holdings to access its team in return for equity. Both parties stated that the goal is to embed OpenAI employees in these companies to enhance speed, accuracy, and cost efficiency.

Thrive was founded by Josh Kushner in 2010 and is known for its small number of high-value, long-term investments. In recent years, Thrive has shifted its focus to AI. The company first invested in OpenAI in 2023, when its valuation was $27 billion.

Later that same year, Thrive led a $6.6 billion investment in OpenAI, pushing its valuation up to $157 billion, an astonishing figure at the time. In April this year, Thrive launched Thrive Holdings, beginning to draw on private equity operational models.

The collaboration between OpenAI and Thrive Holdings aims to strengthen enterprise adoption of AI, a key focus for both parties. OpenAI and its competitors are striving to demonstrate the commercial value of their systems and attract more customers to offset the enormous costs of building and operating AI systems.

OpenAI Chief Operating Officer Brad Lightcap said in a statement that this partnership with Thrive Holdings is intended to demonstrate how cutting-edge AI research and applications, when rapidly deployed across organizations, can transform the way businesses operate and interact with customers. He expressed hope that this collaboration would become a model for deep cooperation between global enterprises, industries, and OpenAI.

However, this move has also intensified external criticism of OpenAI's circular transactions. As technology companies exchange funds and services through equity, chip agreements, and cloud computing contracts in the AI race, investors and analysts are increasingly concerned about these arrangements.

In the current deal, OpenAI will take a stake in a branch of a venture capital company that holds OpenAI shares. According to a person familiar with the matter, this arrangement is intended to better align the incentives of both parties over time. In other words: OpenAI is taking a stake in a company established by its own investor's investment vehicle.

Such collaborations raise concerns that a complex and highly interconnected network of transactions is artificially propping up the AI boom.

For example, Nvidia (NVDA.O) once agreed to invest up to $100 billion in OpenAI to help it build data centers; in exchange, OpenAI committed to deploying millions of Nvidia chips in these data centers. Weeks later, OpenAI reached a partnership with Nvidia's competitor AMD (AMD.O), planning to deploy AMD chips worth tens of billions of dollars. As part of the collaboration, OpenAI is expected to become one of AMD's largest shareholders.