Investing 6 Trillion Yen in OpenAI? That Hasn't Been Paid Yet: SoftBank and the Future of AI Hegemony
Following the Nikkei report, "OpenAI to Raise 6 Trillion Yen from SBG and Others, Massive Investment in AI Infrastructure," I have seen many people on social media and in comments misunderstand that "OpenAI has already completed a total fundraising of $40 billion (approximately 6 trillion yen)." Therefore, in this article, I will reorganize and explain what this report actually indicates.
First, looking only at the article title, those who are not familiar with finance or startup investment might get the impression that "Masayoshi Son generously paid 6 trillion yen to Sam Altman in one lump sum! Mr. Son is truly a billionaire!" However, in reality, SoftBank Group (SBG) has not paid the entire 6 trillion yen.
What is a funding round?
An "investment round (funding round)" is a process that companies carry out in stages to raise capital. For startups and high-tech companies, it is common to raise funds through multiple rounds (Series A, B, C, etc.) as they grow. The investment in OpenAI this time is also a large-scale funding round divided into two stages.
Details of the Investment Schedule
The funding round that OpenAI is currently pursuing is being implemented in two stages as follows.
SoftBank Group (SBG)
1st round: $7.5 billion (approx. 1.1 trillion yen)
- It is said that payment procedures are already underway.
2nd round: $22.5 billion (approx. 3.4 trillion yen)
- Scheduled to be paid on the condition that OpenAI completes its full transition to a for-profit entity by the end of 2025.
Total: $30 billion (approx. 4.5 trillion yen)
- SBG is expected to account for 75% of the entire round, making it the largest investor in OpenAI's history.
Other Investment Funds
1st round: Total $2.5 billion (approx. 375 billion yen)
2nd round: Total $7.5 billion (approx. 1.125 trillion yen)
Total: $10 billion (approx. 1.5 trillion yen)
- The remaining 25% is shared by other funds. Funds reported to be participating include Magnatar Capital, Coatue Management, Founders Fund, and Altimeter Capital.
OpenAI's Corporate Value and Background
With this funding round, OpenAI's corporate valuation has reached approximately $300 billion (approx. 45 trillion yen), nearly doubling from $157 billion as of October 2024. SBG's investment ratio is particularly notable, suggesting that Masayoshi Son is clearly demonstrating an aggressive investment stance in the AI infrastructure sector.
In addition, SBG is participating in the "Stargate Project," a massive data center construction project in the United States, in collaboration with OpenAI and Oracle, with a total investment of $500 billion planned.
Investment Concerns and AI Market Competition
OpenAI is proceeding with a total of $40 billion (approx. 6 trillion yen) in funding under the leadership of SoftBank Group (SBG). However, in the AI industry, many low-power AI models with performance equal to or better than OpenAI's are emerging not only in the United States but also in China. For example, the Chinese startup DeepSeek has announced its latest large language model, "DeepSeek-V3," which shows significant improvements in reasoning and coding capabilities.
Furthermore, France's Mistral AI aims to surpass DeepSeek through open-source development, adopting a strategy of building powerful AI models without massive capital investment. In fact, open-source AI models are also on the rise, and AI scholar and entrepreneur Kai-Fu Lee has pointed out the possibility that OpenAI may struggle in competition with open-source models.
Risks and Market Reaction
Given these circumstances, SoftBank Group's (SBG) massive investment in OpenAI could further increase the company's management risk. In particular, the AI market is evolving day by day, and with new startups and open-source models emerging one after another, an investment method that concentrates a large amount of capital in a specific company requires careful consideration from the perspective of risk diversification.
In fact, the credit default swap (CDS) premium rates, which indicate SBG's credit risk, have soared, clearly reflecting market concerns about the feasibility of such massive investments and their impact on the company's finances.
When you hear "SoftBank vs. Rakuten," many people might think of a baseball game. However, what is currently being talked about in the financial and securities industry is the fierce battle over which has higher credit risk: "SoftBank vs. Nissan".
If you are a reader of my note, you may already know that Nissan is a company that would not be surprising if it went bankrupt at any time. A very dangerous situation is actually occurring where Nissan and SBG are competing for the top spot among companies listed on the Tokyo Stock Exchange in terms of CDS premium rates, which are a measure of credit risk.
Concerns over massive investment
Meanwhile, credit default swaps (CDS) indicating SoftBank Group's credit risk are surging. This is due to concerns arising regarding the feasibility and financial impact of the Stargate project.
According to interviews with traders, as of 8:50 a.m. on the 3rd, the mid-spread (the midpoint between bid and offer) for 5-year CDS was approximately 235 basis points (bp), the highest level since August 2024.
SBG's massive investment in OpenAI, considering the intensifying competition and the speed of technological innovation in the AI industry, could potentially increase SBG's management risk. It will be necessary to carefully consider investment policies while closely monitoring future market trends and technological innovations.
*This article is for informational purposes only and does not solicit or recommend investment in any specific financial products. Please make final investment decisions at your own responsibility.
Rintaro Takechi
