A retrenchment in fintech and boom in AI have shuffled the list of the Bay Area's most valuable venture-backed private companies.
According to a recent report by Bloomberg News, OpenAI is in talks to sell some employee shares to investors at a valuation of $86 billion.
This stratospherically high valuation could make OpenAI the most valuable startup and even private company in the region, especially after South San Francisco payments startup Stripe saw a precipitous decline in valuation.
Once worth $95 billion in 2021, Stripe slashed its valuation to a mere $50 billion earlier this year in order to raise $6.5 billion from investors to use for liquidity for current and former employees, as well as tax obligations associated with equity awards. Stripe's valuation had been on a gradual decline from its peak, dropping to $74 billion in July 2022 in an internal valuation then $63 billion in January 2023, as it prepared to raise new funding. The company also laid off 14% of its employees last year.
In mirror fashion, OpenAI's price tag has been dramatically on the rise. In January Microsoft invested $10 billion into the AI startup at a $29 billion valuation. In April, the company had a $300 million venture funding round at a $30 billion valuation. In September the Wall Street Journal reported that OpenAI was seeking to sell shares at a valuation of $80 billion to $90 billion.
This would make OpenAI by far the most valuable startup in the Bay Area, but still behind privately-owned tech unicorns SpaceX, Elon Musk's Southern California-based space rocket company, and ByteDance, the Chinese creator of TikTok.
Stripe may also be facing some valuation competition from another San Francisco AI company, Anthropic, which is reportedly seeking to raise funds at a $20 billion to $30 billion valuation, following a multibillion-dollar investment from Amazon.
It's possible OpenAI's valuation might be even higher, since a sale of employee equity would typically involve common stock. Venture capitalists typically pay a premium for preferred shares, which enjoy stronger protections.
