Sam Altman offered $2 million worth of OpenAI tokens to each startup in the current YC cohort in return for equity. The investment is structured as token allotments rather than cash, enabling startups to use the tokens to build their products. The cohort includes about 169 startups. The equity amount each startup gives up cannot be determined upfront and depends on the startup’s valuation when it raises its first priced round. The deal is offered as an uncapped SAFE that converts in the next priced round, typically the Series A. An uncapped SAFE provides no valuation ceiling, so higher conversion valuations reduce the investor’s ownership slice. Some estimates suggest OpenAI could hold around 2% equity at a $100M valuation, though terms are not confirmed.
"Altman offered $2 million worth of OpenAI tokens to every startup in the current class in exchange for equity in the startup. In other words, he promised that OpenAI would invest in the whole class, not with cash but with an allotment of AI tokens that startups can use to build their products."
"As for how much equity each startup can expect to give up, that can't be determined at the time it signs the deal. It will depend on how much the startup is worth when it raises its first priced round - a funding round in which investors assign the company a formal valuation."
"Jared Friedman tells TechCrunch that the deal will be offered as an "uncapped SAFE," meaning, "it will convert in the next priced round, which is typically the Series A," he said. A SAFE is YC's standard agreement structure for its early-stage companies that raise money before their first "priced" rounds with valuations involved."
"An uncapped SAFE doesn't set a ceiling on that valuation, which can benefit founders because the higher the valuation at conversion, the smaller the slice of the company the investor receives. We've seen some discussion on X that this deal could amount to OpenAI holding about 2% equity should a startup hit a $100M valuation, though without seeing the actual terms, we can't verify that."
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