CNBC reports that OpenAI is close to a new private funding round of up to $30 billion at a $1.25 trillion pre-money valuation. CO2 and UAE-backed investors are expected to lead. The UAE money could be paired with a deal for more compute capacity in the region. That number is down from the $1.4 trillion valuation Bloomberg reported the company was seeking in late September for the same $30 billion target. Anthropic, which raised at $965 billion in May, is reportedly targeting $1.5 to $2 trillion for an IPO that could come first. So the reported price target came down about $150 billion in a month. What is the biggest thing for you that changed between September and today?
Okay. So we don't have complete information here about the terms of the deals, protective provisions, etc. So there's a lot of nuance in terms of what the valuation means in relation to the investment. For example, did they mention how much they're raising in this round?
They're looking for $30 billion. Yeah, at a $1.25 trillion. So now, do those investors have a liquidation preference where they are guaranteed a minimum of 2x, $60 billion, or before anybody else shares in the preference? Do they get 7%, 10% interest every year until it converts if it's on a convert, or do they have a minimum amount? Do they have the ability to call back the investment? So we had this happen with one of our startups. Somebody said, 'Oh, you know that Series B we gave you, we had a seven-year window for it, and then we can demand our money back. The company's profitable.' And so now the Series B investor was like, 'Yeah, we don't believe in the company anymore, we don't believe in this growth here. Just give us back our $100 million.' Now the startup's making $50 million a year, but it wants to grow, and now they've got to give 40 of the 50 million back each year, you know, or so. So there's a lot of those protective provisions, downside provisions that we don't know about. Anyway, the relative, what you have to look at here is just how much money is the business making. That's another thing that we did. Is there a mention here in this round of what the current revenue run rate is and the revenue run rate?
There's two different ways to look at this while you look it up. There's ARR, annual recurring revenue, and then there's annualized revenue run rate. ARR, like a pirate. People conflate these two numbers all the time. Sometimes people do it on purpose. Sometimes people do it accidentally. And I'm constantly, even with my own team, saying, 'What ARR are we talking about here?' And they're like, 'Oh, well, you know, they sell this product.' And I'm like, 'Okay, if they sell a product and the person is not obligated to buy that product next month, that's annualized revenue run rate, which is take last quarter, times it by four, or take last month and times it by 12.'
It's very funny. I'm looking it up right now. Their annualized revenue run rate is approximately $50 billion. Okay, I'm looking at it, and it doesn't explain how that was calculated, but generally what was last month's revenue times 12. Right now, sometimes people will sign a huge contract that goes away the next month and it was a weird thing. So they signed a $10 billion contract or had some special circumstance that month, and then all of a sudden things look really out of whack. So we don't have all these details here. I think what I'm seeing is 50 billion.
Yeah. So all you need to do is look at the valuation here. You said it's 1.2 trillion. 1.25, 1.25 trillion. 1.25. All right. So you divide these two numbers, you get to 30. It's 30 times price-to-sales ratio, price valuation to sales, sales topline revenue, not profits, not gross profit, not EBITDA, not community-based EBITDA. It's the best EBITDA. That's my Adam Neumann from WeWork. Watch the show from Hulu or whatever it was on. Anyway, it's 30 times topline for an incredibly high-growing business. I think they have actually right-sized the valuation to a certain extent. If you told me I could put, I don't know, 5% of my net worth into this, 10% of my net worth at this price, I'd take a deep look at it.
Really out of Frontier Lab right now? Really, you still think? Honestly, I think they've right-priced it. I think this would be going for 100 times the annualized revenue run rate if we were talking about it a year ago when the hype cycle was crazy. Yeah.
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