OpenAI and Anthropic, locked in a battle for dominance in artificial intelligence models, are now clashing in the private equity market. Both companies are building PE alliance networks to provide AI consulting services, betting that corporate demand for AI will continue.
Reuters reported Wednesday, citing sources, that OpenAI is pursuing joint ventures with private equity firms for AI consulting, offering more favorable terms than rival Anthropic.
The business model involves building customized AI models for companies in PE portfolios, with OpenAI and the PE firms splitting the revenue. OpenAI is in discussions with Bain Capital, TPG, Advent International and Brookfield Asset Management to raise $4 billion at a $10 billion valuation for the venture.
Anthropic, OpenAI's biggest rival, is also pushing to establish a consulting venture with Blackstone, the world's largest private equity firm, among others, according to The Information. Anthropic plans to deploy its own engineers to integrate its AI system "Claude" into portfolio companies, leveraging its grip on the enterprise AI market.
To win the PE bidding war against Anthropic, OpenAI has offered preferred shares guaranteeing a minimum return of 17.5%. It is also offering early access to its latest AI models. OpenAI has been bolstering its consulting capabilities, signing agreements last month with McKinsey and Boston Consulting Group (BCG).
Both OpenAI and Anthropic are pursuing public listings this year. Joint venture funding could help finance AI development costs and secure enterprise clients, boosting revenue ahead of their IPOs. For OpenAI, the partnerships could strengthen its presence in the enterprise AI market, where it has been relatively weak. For Anthropic, the ventures could provide a breakthrough as it faces the risk of losing partners after the U.S. Department of Defense designated it as a supply chain risk factor.
Despite the aggressive courtship by both AI companies, private equity firms have shown lukewarm interest. Firms are unconvinced the joint ventures will generate long-term profits, and question the need for such partnerships when many companies have already adopted AI. Sources told Reuters that "at least two private equity firms have decided not to participate in either joint venture, citing concerns over flexibility and profitability," adding that "other PE firms are expected to take small stakes with board seats rather than becoming major shareholders."
