How To Invest In OpenAI?

What is OpenAI?

OpenAI is a San Francisco-based artificial intelligence research laboratory that aims to promote and develop friendly AI in a way that benefits humanity. Founded in 2015 by Silicon Valley investor Sam Altman and tech icon Elon Musk (who has since left the board but remains a donor), OpenAI’s stated mission is to ensure that artificial general intelligence (AGI)—AI as smart as humans—is created safely and its benefits are distributed evenly across society.

To work towards this goal, OpenAI employs top AI researchers and computer scientists to push the boundaries of AI capabilities while researching how to make AI systems safe and beneficial. The lab is structured as a non-profit, allowing it to focus on research that may not have immediate commercial value but will accelerate progress towards AGI. OpenAI has already made waves in the AI world with innovations like the GPT language models and MuseNet music generator.

Why Invest in OpenAI?

As a pioneer in AI safety research and powerful AI systems, OpenAI is well-positioned to drive rapid advancements in artificial intelligence over the coming years and decades. With AI poised to become as transformational a technology as electricity or the internet, investing in leading AI labs could prove extremely lucrative in the long run.

Additionally, OpenAI has cultivated partnerships with major tech players like Microsoft and Amazon Web Services which provide the lab with secure data, computing power, and even revenue streams to fund further research. As these tech giants infuse OpenAI’s innovations into commercial products and services, companies with exposure to OpenAI’s state-of-the-art AI stand to benefit greatly.

Getting Started with Investing in OpenAI

Understanding OpenAI’s Business Model

To understand OpenAI as an investment opportunity, it helps to grasp their underlying business model. As a non-profit, OpenAI does not have “owners” or equity shareholders. However, they generate revenue through several channels:

• Commercial licensing of AI technologies: OpenAI allows some corporate partners like Microsoft to license their models and technologies for integration into products and services. These licenses provide revenue to fund OpenAI’s research.
• Cloud compute credits: Partners like AWS and Azure supply OpenAI with compute power for developing and running AI models. Sometimes this comes in the form of credits, which OpenAI can optimize and sell for funding.
• Grants and donations: OpenAI accepts major donations from organizations and billionaire donors to cover operating costs. Employees can also receive competitive salaries and equity-like bonuses based on the lab’s progress.

This model aligns OpenAI’s incentives towards maximizing technological progress rather than short-term profits. Nonetheless, their commercially valuable innovations provide indirect avenues for investment return.

OpenAI’s Potential for Future Growth

Given the tremendous pace of recent AI advancements and the level of talent working at OpenAI, they have almost unlimited potential for growth and impact over the next decade. Consider a few rising areas:

• Robotics: OpenAI is expanding into robotic hands and simulation systems to enable learning from physical interaction. Robotics integration represents a promising growth vector.
• Energy research: Using AI for breakthroughs in fusion energy or renewable sources could hugely benefit OpenAI’s mission of evenly distributing technological gains.
• Biology and healthcare: Applying AI to model complex biological systems or accelerate medical discoveries may draw increased OpenAI talent and funding.
• Financial system AI: As OpenAI develops state-of-the-art reinforcement learning, optimizing economic policy and trading systems arises as an opportunity.

The possibilities are endless for OpenAI’s AI platform as more talent flocks to their decentralized, open-access mission.

Investing in OpenAI Directly

Accredited Investor Requirements

The most direct route for investing in OpenAI itself is through accreditation as an accredited angel investor. This requires:

• Having $1 million+ in assets outside one’s primary residence or an income over $200K/year (or $300K jointly with spouse)
• Reaching out to OpenAI’s General Counsel to express interest and undergo vetting
• Signing legal investor documents with access restrictions to confidential information
• Passing Know Your Customer (KYC) + Anti Money Laundering (AML) checks

OpenAI operates with extreme discretion regarding its investor roster, but sources indicate several ultra-high net worth cryptographers, Silicon Valley billionaires, and AI safety proponents have backed them.

Joining as an Angel Investor

Once accredited and vetted, qualified investors can contribute capital to OpenAI funds as an angel investor. This functions similarly to seed or Series A funding rounds at a startup, with a few key differences:

• OpenAI does not issue equity, but provides investors exposure to their growth
• Investors may receive bonuses based on OpenAI’s research milestones
• The funds only support operating costs, not investor profits

Joining as an angel allows directing capital specifically into OpenAI versus generalized AI investment. It also provides the chance to contribute ideas, expertise, and strategic relationships. However, the payoff comes indirectly over the long-term.

Investing through Venture Capital Firms

For those who don’t meet accredited investor criteria, certain venture capital firms provide a backdoor for retail investors to fund OpenAI. As OpenAI formed initially in 2015, VC firms like Peter Thiel’s Founders Fund and Khosla Ventures backed them early on. Although their later funding rounds focused on select billionaires and mega-donors, the existing VC owners may provide products for “sharing” exposure to OpenAI’s upside. For instance, Brendan Wallace of Fifth Wall has hinted they may create an OpenAI-focused venture fund accessible to wider capital sources.

Investing in OpenAI’s Big Tech Partners

Microsoft

In 2019, Microsoft formed a $1 billion partnership with and became OpenAI’s exclusive cloud provider, marking a major turning point in OpenAI’s commercialization. Microsoft infuses cash and cloud resources (like Azure) into OpenAI, while OpenAI advises Microsoft on cutting-edge AI capabilities to integrate across their stacks like Office 365, Dynamics 365, and Power Platform. With Microsoft’s wide business reach, products influenced by OpenAI’s research may impact billions of users.

As OpenAI’s innovations penetrate Microsoft’s offerings, investing in Microsoft stock and cloud services provides indirect exposure to OpenAI’s advancements. Many analysts cited Microsoft’s OpenAI deal as increasing their price targets, with OpenAI’s AI talents poised to unlock substantial value. As Microsoft commercializes transformative technologies like GPT-3, early-stage Microsoft investors could profit significantly.

Other Tech Partners

In addition to Microsoft, OpenAI partners with elite tech giants on specialized AI projects, including:

• Amazon Web Services: Provides OpenAI with cloud credits for accessing computation for model training.
• Google Brain: Collaborates with OpenAI on AI safety topics and techniques.
• Salesforce: Integrates GPT-3 into customer service chatbots and call center workflows.

Monitoring these partnerships for product integrations based on OpenAI research can yield promising investment opportunities. Salesforce and Amazon themselves are compelling in part due to their OpenAI enablement.

Investing in Companies Adopting OpenAI Technology

AI-Powered Software Companies

Many software startups directly integrate OpenAI models like Codex for coding, Claude for customer service, and GPT-3 for writing content. Investing in standout startups utilizing OpenAI could generate substantial returns as they scale:

• Anthropic develops Constitutional AI assistants trained with advanced safety
• You.Com uses Claude for a next-gen natural language search engine
• QuillBot applies GPT-3 for paraphrasing, summarizing, and enhancing writing

These startups attract top talent to build on OpenAI’s foundations and capture growth from businesses hungry for AI capabilities. The SaaS model also aligns incentives for steady, sticky revenue growth.

Automated Customer Service Platforms

Customer service automation integrators present a huge area leveraging Claude and other OpenAI models to upgrade legacy chatbots and human service teams. Top innovators like Moveworks, Ultimate.ai, and Ada blend OpenAI with intuitive interfaces for enabling self-service and deflecting service tickets.

Evaluating OpenAI Investments

Assessing the Risks

Despite OpenAI’s massive potential, investing carries substantial long-term risks:

• OpenAI research progress stalls or hits ceilings in advancing AGI safely
• Talent gets fragmented across too many AI safety labs
• Government regulation hampers development due to public pressures
• Failure to commercialize innovations or conflict around licensing rights
• Microsoft or other backers end partnerships and shift resources elsewhere

Especially as such an early-stage experiment, OpenAI could flounder and fail to deliver ROI even after decades. Any venture capital also depends upon identifying motivated, high-integrity individuals to entrust with substantial resources.

However, for patient investors with sufficient wealth, backing cutting-edge AI safety now could pay exponential dividends later if steered prudently.

Long-term Growth Prospects

Despite the risks, OpenAI growth prospects appear extremely strong looking 5-10 years out:

• Model performance will continue advancing at a blinding pace per compute scaling laws
• Applications to robotics, energy, synthetic content, and more widen total addressable market
• Deals with hyperscale cloud providers fortify infrastructure for unfettered exploration
• Demand for AI safety insights and talent surges as AGI approaches nearer
• Revenue potential unlocks fully upon achieving and licensing key milestones

If OpenAI reaches escape velocity on the technical front while maintaining discipline on ethics and governance, early investors may witness tremendous value creation within the next decade as AI permeates the global economy.

Other Ways to Gain Exposure to OpenAI

Work at OpenAI

The best minds in machine learning flock to directly work at OpenAI itself, given their pure research focus and resources to push boundaries. Joining core model, robotics, or safety teams lets one contribute directly to OpenAI’s mission while benefiting from potential bonuses tied to research milestones.

Staff also develop rare expertise in domains like reinforcement learning, adversarial attacks, and responsible disclosure that builds career capital. Although compensation lags big tech and quant firms, the experience often leads to lucrative opportunities afterward.

Contribute to OpenAI Projects

Developers worldwide can also informally contribute to OpenAI’s open-source projects on GitHub around spaces like Spinning Up RL, MuseNet, or Universe. Besides aiding progress, this raises visibility as a skilled practitioner for full-time roles or collaborations.

Submitting thoughtful bug reports, fixes, enhancements, examples, and documentation leverages one’s talents to advance OpenAI while networking with researchers. This helps the ecosystem mature.

Invest in Adjacent Tech Categories

Rather than directly backing OpenAI, investors bullish on AI’s progress can also gain exposure by pouring capital into adjacent categories pushing the space forward, like:

• Chipmakers (e.g. NVidia, AMD) optimizing next-gen silicon for model performance
• Cloud infrastructure (AWS, GCP) providing the substrate for AI experimentation
• Robotics companies (e.g. Boston Dynamics) expanding interactions with the physical world
• Research orgs (DeepMind, FAIR) generating insights to share across institutes

This diversity hedges bets on AI’s co-evolution while supporting an ever-rising tide from breakthroughs.

Conclusion and Looking Ahead

Investing in pioneering AI research labs like OpenAI carries risks, but could generate substantial long-term value as AI transforms global industries. Although OpenAI itself has limited direct investment avenues, opportunities exist through:

• Accrediting as an angel investor in OpenAI funds
• Investing in OpenAI’s big tech partners and integration pipelines
• Funding startups building on OpenAI’s open models
• Working or contributing directly to OpenAI projects

For suitable investors with patience and fortitude, backing OpenAI early constitutes a privileged vantage for compounding benefits as AI capabilities scale over the decades ahead.

What Does the Future Hold for OpenAI?

OpenAI stands positioned at the forefront of multiple waves of AI disruption rolling through the global economy. Even the slightest chance at steering the most important technology resource since the internet toward broadly positive outcomes commands sizable funding.

With AGI possibly emerging within two decades, the window for nudging its development favorably shrinks daily. OpenAI strives to expand that window by marshaling resources today for maximal foresight and prudence. Their success executing on safety while unlocking capabilities merits investors’ attention and capital.

Backing responsible AGI may mark one of the most impactful investments imaginable. By contributing ethically to OpenAI’s emergence today, tomorrow holds hope of an uplifted civilization amidst the stars.

FAQs about Investing in OpenAI