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Secondaries

Altman’s ouster from OpenAI spooks secondary investors

Around $100 million worth of interest in OpenAI shares on secondary marketplace Caplight evaporated over the weekend after its board terminated CEO Sam Altman.

Investor interest in OpenAI shares on the secondary market has gone from a feeding frenzy to a near standstill as prospective buyers wait for news following the surprise termination of CEO Sam Altman.

Buyer interest in OpenAI stock totaling around $100 million all but evaporated between Thursday and Monday, according to Javier Avalos, CEO of secondary trading platform Caplight.

“Buyers are running for the hills,” said Glen Anderson, president of Rainmaker, a bank that trades pre-IPO shares. Anderson added, however, that the dip in investor interest may be temporary, as secondary investors await future developments.

In a shock to the tech world Friday, the board of leading generative AI company OpenAI terminated Altman. By Monday, Microsoft, a major investor, announced that it had hired Altman to run an advanced AI research lab, alongside OpenAI co-founder Greg Brockman, who had already quit in protest.

In a tweet posted Monday following Microsoft’s announcement, Altman wrote: “we have more unity and commitment and focus than ever before. [W]e are all going to work together some way or other, and [I’m] so excited.”

Over 700 current employees of the company have signed a letter threatening to quit the company if the four-person board does not reinstate Altman and Brockman and then resign.

“Prospective secondary investors have pulled back until the situation has more fully played out,” Avalos said.

OpenAI shares don’t trade directly in the secondary market. Rather, direct investors in the company have created dedicated special-purpose vehicles with the company’s shares. Interested buyers can purchase fractional shares in these SPV funds, which is a common tactic for purchasing secondary interest in companies that have limited secondhand stock available, according to Anderson.

Buyer appetite for OpenAI unit shares was nearly insatiable up until Altman was ousted, Anderson added.

“There are still interested buyers in the space,” according to Akrati Johari, chief growth officer of Zanbato, a secondary trading platform that caters to institutional buyers.

“Although, they’re also waiting for information to figure out exactly where exactly this lands,” she said.

OpenAI has been in the process of conducting a tender offer program for its current and former employees at an $86 billion valuation, The Information reported. The program, led by Thrive Capital, was reportedly thrown into disarray when the news broke of Altman’s termination.

Featured image of former OpenAI CEO Sam Altman by Andrew Caballero-Reynolds/Getty Images

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