OpenAI has gigantic capital need and superb capital-raising charm
For startup firms like Tesla and OpenAI, the big difference from Apple is the lack of positive cash flow and hence the need to raise big money to fund its rapid expansion. For the case of OpenAI, its capex bill and capital raising need are astronomical but it also has superb ability to attract investors from PE managers, sovereign funds, banks, family offices, or leading tech firms such as Nvidia to commit investing literally hundreds of billions of dollars. In the current round of PE funding, it seems fetching a US$500 billion valuations, likely the biggest in private equity history. In 12-18 months, OpenAI could become US’s first US$1 trillion IPO to help it raise a couple hundred billion dollars in the future.
Once the hardest part (money) is done, the rest are less difficult. On the labour side, although it faces stiff competition from all AI leaders like Facebook, Google, Microsoft, & others but its ChatGPT charm goes a long way to help attracts talent. Lucrative stock option plans before its imminent IPO is another big help. Lastly – land, including electricity power, could be tricky but strong demand and deep pocket could help it to secure electricity power soon. Tech advancement on lowering power demand such as improving heat management like the one Microsoft announced this month could slash power consumption in the future. On the other hand, electricity technology such as Small Module Reactor, Hydrogen, & others could increase electricity supply in the next few years too.
