Sam Altman’s Tangle of Investments

The OpenAI CEO says he didn’t take equity in the white-hot startup because he doesn’t need the money. But Altman’s voracious investing habit over the past decade has put him at the center of a web of startups, some of which stand to benefit from the AI boom.

OpenAI CEO Sam Altman. Photo by Getty. Art by Mike Sullivan

Among the many unusual facts about OpenAI, the buzzy startup behind the hugely popular chatbot ChatGPT, the most extraordinary may be that Sam Altman, its CEO and co-founder, doesn’t have any equity in it. He gave up the opportunity for a huge potential payday, he says, simply because he doesn’t need the money.

But Altman, 38, has a head-spinning number of investments in plenty of other companies he believes will make him a lot more money in the future. Over the past decade, he has become one of Silicon Valley’s most prodigious angel investors, making around 400 investments in companies such as Reddit, Stripe and Asana, along with AI startups like Cerebras and Humane.

He has made many of his investments through Hydrazine Capital, a San Francisco–based venture firm he founded that invests capital from him as well as others like Peter Thiel, and through Apollo Projects, an investment fund he launched with his brothers, Jack and Max Altman.

The Takeaway

• Altman has a web of overlapping investments in AI and beyond
• He’s an LP in Altman Capital, run by his two brothers
• Altman says he has stopped making “major” investments

Altman is also a limited partner in Altman Capital—a venture firm founded by his brothers, which has backed startups such as Verifiable, Owner and Finch. And through Y Combinator, the famed incubator he led for five years, he has stakes in Instacart and hundreds of other startups. Last November, he announced a $375 million personal investment in nuclear fusion startup Helion, a staggering sum that was his largest personal check to date. And if that wasn’t enough, Altman also has his fingers in two special purpose acquisition vehicles—AltC Acquisition and Bridgetown Holdings—that have sought to buy other companies.

On Tuesday—just ahead of a Wednesday deadline to complete a transaction—AltC announced it planned to acquire a company near and dear to Altman: Oklo, a nuclear fission startup backed by Altman through both Y Combinator and Hydrazine. Oklo’s CEO, Jacob DeWitte, told The Information that Altman, who has been chair of Oklo’s board since 2015, recused himself from both AltC’s and Oklo’s deliberations about the deal.

While Altman was already one of the best-connected investors around, his leadership of OpenAI, where he is CEO, has made founders even more eager to get him involved in their startups. With the explosive growth of ChatGPT, OpenAI has rocketed to a $29 billion valuation and triggered an artificial intelligence arms race among startups and the world’s largest tech companies, including Alphabet’s Google and Microsoft, a major OpenAI investor and partner. That has enhanced Altman’s stature as a visionary, someone many founders want involved with their companies.

“There are very few people in the world now who don’t know about GPT…and that means his ability to back a startup at a great valuation has gone up considerably, and so there is a sort of indirect financial upside for him,” said Seth Bannon, a founding partner of venture firm Fifty Years, which backed Worldcoin, a crypto project Altman founded.

Altman’s dual career as the leader of OpenAI and a hyperactive angel investor has prompted some investors to grumble privately about possible conflicts of interest between the two roles. Some of them have suggested Altman could get better deals and terms from eager founders looking to get early access to OpenAI’s powerful technology. Disapproval of this view isn’t universal: Bannon, for one, said he’s unbothered by the uptick in startup access Altman is getting and said he doesn’t believe Altman is “powerful enough.”

In an interview with The Information, Altman said he’s mindful of conflicts of interest arising from his investments. As a result, he said, he has tried to avoid backing new AI startups over the past two years. And as running OpenAI has consumed more of his time since the launch of ChatGPT, he has cut back on the pace of other investments as well.

“I don’t do much anymore,” Altman said of investing. “I used to be super proactive—I would try to show up in offices and like to do stuff for people, and that’s what I’m not doing [now].” He later added over text message that he will continue to do smaller investments of around $100,000 once in a while but has not made a major investment since November. Altman didn’t respond to a request for comment about what the total value of his portfolio is.

“Generally, I think the approach to conflict of interest is just avoid things that are directly an issue with the company you’re running and disclose everything,” Altman added.

To ‘Benefit Humanity’

Altman caught the startup bug in 2005 when he dropped out of Stanford University and co-founded Loopt, a location-sharing startup that participated in Y Combinator’s first-ever accelerator program. Altman and co-founder Nick Sivo fundraised from the accelerator as well as from Sequoia Capital and New Enterprise Associates.

Eventually, the duo sold the company to banking fintech Green Dot in 2012. The proceeds from the sale, $43.4 million in cash, provided the starting capital for Hydrazine, an early-stage venture firm, which Altman named after a liquid used for rocket fuel. The fund included an investment from Peter Thiel, billionaire investor and PayPal co-founder.

One of Altman’s earliest personal investments was a fortuitous one—Stripe, the digital payments startup. He later said the investment was his most “most successful, on a multiples basis” to date. His stake in Stripe got even bigger after 2011, when he became a partner at Y Combinator, which made its own investments in the payments company.

In 2014, Paul Graham, a co-founder of the incubator, picked Altman to be his successor. Over the next five years, Altman greatly expanded the number of startups the accelerator funded each year, pushing it into new categories such as carbon removal technologies.

While at Y Combinator, Altman kept up his personal investing, in some cases putting money into startups the firm also backed, including Reddit, self-driving–vehicle startup Cruise and Helion, according to blog posts by Altman. At times, Altman played a pivotal role in the evolution of his investments. For example, Altman introduced Cruise to General Motors, according to a person with direct knowledge; in 2016, the automaker bought a majority stake in the startup in a $1 billion deal.

In 2015, Altman and a group of other tech luminaries—including Tesla CEO Elon Musk, former Stripe Chief Technology Officer Greg Brockman and others—formed OpenAI as a nonprofit research lab, with the goal of creating a counterweight to the AI expertise that powerful corporations like Alphabet were then hoarding. The group nabbed $1 billion in backing, including from Y Combinator’s research arm.

In March 2019, OpenAI launched a for-profit arm to fund the startup’s growing need for computing power to train large-language models. As part of that shift, it also put in place a structure that capped investor profits from the company. Investors in the first round of the company, for example, have returns capped at 100 times their initial investments. Critics including Musk, who eventually severed his ties to OpenAI, have recently blasted the creation of the for-profit entity, saying it made the company rife with perverse incentives to generate profits at the expense of its original purpose, to “benefit humanity.” (Musk on Wednesday formally announced the creation of a new AI company, xAI.)

In 2019, Altman left his position as president of Y Combinator to focus full time on OpenAI, which raised $1 billion from Microsoft that year. Altman said he decided to take no equity in OpenAI because the board needs a majority of disinterested directors who have no stake in the company. Altman, who is a board member of the OpenAI nonprofit, has said publicly he only makes enough money from OpenAI to pay for his healthcare.

He hasn’t been able to entirely rid himself of financial ties with OpenAI, though. Late last month, Altman told a reporter at Bloomberg’s Technology Summit that he held an “immaterial” stake in the startup from his time at Y Combinator. Y Combinator declined to comment on Altman’s stake in its OpenAI investment.

Conflict Management

His pledge to avoid direct economic benefits from OpenAI has led to some curious arrangements. For example, as CEO, Altman theoretically oversees the OpenAI Startup Fund, which invests in other AI startups. In reality, OpenAI’s chief operating officer, Brad Lightcap, is in charge of the firm’s investment decisions.

Altman doesn’t take a cut of management fees from the fund and will distribute future returns from the fund among other partners, according to an OpenAI spokesperson. A security filing for the fund lists Altman as its sole executive, but the spokesperson says he is not an investor in the fund.

One of the benefits companies who take money from the OpenAI Startup Fund receive is early access to its latest technologies, such as machine-learning models. Other startups don’t automatically get that perk, even if they have a connection to Altman. For instance, Zac Townsend, founder of life insurance crypto startup Meanwhile, said Altman denied his request when he asked for early access to GPT-4, a recent version of its LLM.

“He said the queue is what the queue is—no one skips the line on GPT-4,” Townsend said.

On at least one occasion, the OpenAI Startup Fund also backed a company Altman had personally invested in. In 2021, Altman led a Series A investment in Speak AI, an AI-powered language tutor. Then last year, when the CEO of Speak, Connor Zwick, reached out to Altman to see if he wanted to participate in the company’s next funding round, Altman declined, saying he could not invest in the startup again without the OpenAI Startup Fund looking at the deal first.

Later that year, the fund led a $27 million Series B investment in Speak at an undisclosed valuation. Altman did not participate in the round. “We had become more of an AI company over time, [and] he made it clear at least at that point in time, in 2022, that he could no longer invest without letting OpenAI look at it first,” Zwick said.

At the same time, OpenAI’s most important corporate partner, Microsoft, has emerged as an especially close ally of two companies Altman has invested in. This year, Microsoft signed a contract to purchase electricity from Helion, the fusion power company Altman invested in, if its technology succeeds. And in March, Humane, an AI company launched and developed by ex-Apple employees, announced that both Altman and Microsoft had invested in the company. Humane also announced new collaborations with both OpenAI and Microsoft.

Altman in a text message said Microsoft’s deals with Helion and Humane were “totally separate things” from the company’s OpenAI relationship. A spokesperson for Microsoft said Altman and OpenAI didn’t influence the deals.

As OpenAI takes up more of his time, Altman’s brothers have been taking over more of the family’s investment activities. Altman Capital, managed by younger brother Jack for the last three years, focuses on enterprise software startups. It closed a $20 million debut fund in 2021, and more recently raised an $80 million fund with brother Max Altman, currently a general partner at the firm, according to a person familiar with the matter.

Sam Altman is a limited partner but is not involved in an adviser or partner capacity in the fund, according to Max Altman. “When we invest in companies, it’s not like the startup founder will have access to him,” Max Altman said.

Still, founders say having Sam Altman’s name on their cap tables opens doors with other technology decision-makers. Last year, Altman co-led a $29 million funding round for Campus, which helps college teachers develop accredited online classes. Tade Oyerinde, the company’s founder, said Altman’s involvement has raised his profile, getting him invitations to speak on panels about the future of AI and education.

“The world reacts to his name differently, and I think people are just a lot more interested in what we’re doing now,” Oyerinde said.

This story has been updated to correct the name of Speak AI CEO Connor Zwick.

Natasha Mascarenhas is a reporter at The Information, based in San Francisco, who covers venture capital and startups. She can be reached at [email protected], or on Signal at +1 925 271 0912. She is on Twitter at @nmasc_