Hey Everyone,
Many of us who follow Generative AI, the new AI startups and Venture capital trends related to it have been wondering about OpenAI’s Startup Fund.
It turns out Sam Altman has been using the “OpenAI” name for himself and he’s the true owner of this OpenAI’s venture capital fund, according to Axios. Amazingly, Sam Altman isn’t just the CEO of ChatGPT maker OpenAI. He’s also the owner of OpenAI Startup Fund, which Altman once called a “corporate venture fund,” according to federal securities filings.
By last May (2023) it reported $175 million in total commitments. I’ve always been curious about it and perhaps so are you? I asked ML & AI market researcher and analyst Alex Irina Sandhu to look more closely into it for this guest post today. Subscribe to her Newsletter, the Strategy Deck.
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Sam Altman owns OpenAI’s venture capital fund
OpenAI Startup Fund (okay Sam Altman 🙄) picks some really fascinating startups to back. They launched their second Converge startup cohort back in December, 2023. As with members of the OpenAI Startup Fund’s first Converge cohort, the 10-15 startups chosen to participate in Converge-2 will receive a $1 million equity investment from the OpenAI Startup Fund. This is in addition to major investments in select AI startups.
Sam Altman used the OpenAI name to gain traction it appears. What set OpenAI Startup Fund apart, however, was that it wasn’t (and isn’t) owned by OpenAI. It always had outside limited partners, including major OpenAI partner Microsoft, which is unusual for corporate VC funds but not unique, according to Axios.
It would have been a lot easier had he just been open about it the entire time.
The fund is managed by a dedicated team with expertise in investing, ML, engineering, talent and operations. The fund’s investors include Microsoft and other OpenAI partners, although OpenAI itself is not an investor. Lean more.
Figure’s Big Round?
Also important to note Microsoft and OpenAI have been rumored to be investing big into humanoid robotics startup Figure, to the tune of $500 million (yet to be finalized). Which would be its second robotics startup. This was a scoop originally by Bloomberg. Microsoft would invest about $95 million and OpenAI would put in $5 million as part of the round that would be led by Microsoft.
OpenAI and Its Startup Fund’s Venture Investments
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In recent AI news, we’ve learned about funding rounds secured by companies backed by OpenAI and its startup fund, such as Ambiance Healthcare’s Series B in January this year and Harvey’s in December 2023.
Besides these recent developments, what other companies has OpenAI invested in? And what about its investment fund?
Here are the startups with public announcements of investments from OpenAI and OpenAI’s Startup Fund from the past year. They range across a good variety of segments and verticals and include:
2 Developer tools companies – Kudo AI and Anysphere
3 Consumer-focused assistants – Mem, Milo and Speak
4 Enterprise ventures – Ambiance Healthcare, Class Companion, Descript and Harvey
2 Hardware startups – Ghost Autonomy and 1X
Kudo AI
Kudo AI is the developer of chatgpt.js, an open source, client-side JavaScript library for ChatGPT which enables features such as: adding wide screen and full window modes to OpenAI’s chatbot, displaying results from ChatGPT in the search results page of various engines, such as Google, DuckDuckGo and Brave Search.
Founded in February 2023 and based in Oakland, CA KudoAI has received a US$98,000 grant from companies including OpenAI, Microsoft, Ansarada, Bubble and MongoDB.
Descript
Descript offers an all-in-one, collaborative video and podcast editing product with features such as screen recording, transcription, clip creation and publishing of finished materials. Its AI tools include video manipulation through text, AI voice cloning, automatic background noise removal and green screen effects.
Founded in 2017 and based in San Francisco, CA, Descript raised a total of US$100M with backing, among others, from OpenAI, Andreessen Horowitz, Redpoint Ventures and Spark Capital.
Ambience Healthcare
Ambience Healthcare defines its product as the AI operating system for healthcare, featuring a synergistic ecosystem of AI applications meant to reduce clinician burnout, improve system efficiency and enable quality care.
Its tools include:
AutoScribe – documentation tuned for clinical specialties
AutoCDI – conversation analysis and reviewer of ICD-10, CPT codes and documentation
AutoAVS – after visit summaries in a variety of languages
AutoRefer – referral letters to other specialties
AutoPrep – pre-charting and agenda design for patient visit
Ambience’s AI features have been fine-tuned for a variety of specialties and subspecialties, from cardiology to pediatrics to understand their specific workflows, reimbursement frameworks and prior authorization requirements.
Based in San Francisco, CA and founded in 2020, Ambience Healthcare last raised a US$70M Series B in February 2024 co-led by Kleiner Perkins and the OpenAI Startup Fund and including the VC firms Andreessen Horowitz and Optum Ventures.
I did a deep dive on them recently here.
Ghost Autonomy
Ghost Autonomy develops the capabilities of multi-modal LLMs to enable software with deeper understanding for consumer autonomous vehicles. Advanced reasoning performance combined with the ability to draw conclusions by combining video, image and audio data could be the solution to understanding complex or unusual driving environments.
Based in San Francisco, CA, and founded in 2017, the company announced a US$5M investment from the OpenAI Startup Fund in November 2023, bringing the total amount raised by Ghost Autonomy to US$220. Other backers include Sutter Hill Ventures and Founders Fund.
Anysphere
Anysphere is the maker of Cursor, an AI-powered Integrated Development Environment (IDE) which supports natural language interaction for coding questions, reference files management, code editing and error debugging. Cursor is a fork of Visual Studio Code, Microsoft’s open source code editor, made better through the addition of GPT-3.5 for the free version and GPT-4 for the paid subscription users. You can find a list of the features planned for the near future here.
Based in San Francisco, CA, Anysphere raised a US$8M Seed round from the OpenAI Startup Fund in October 2023, increasing the total amount to US$11M.
Class Companion
Class Companion is an AI teaching assistant meant to help with instant, personalized feedback on written assignments, enable student practice sessions and report on learning progress. Used by high-schools across America, Class Companion helps teachers and students with reading comprehension, critical thinking and synthesis skills.
With the tagline “Giving teachers superpowers”, Class Companion is based in San Francisco, CA and is backed by the OpenAI Startup Fund and Index Ventures. The company last raised US$4M in Seed funding in October 2023.
Milo
Milo is an AI co-pilot for parents, powered by GPT-4. It aims to “save your time and sanity” by helping manage family events, grocery lists, appointments and messages. The app can receive SMS threads, emails, screenshots, pictures and voice messages as input, it stores and sorts the data and returns organized and accessible reminders and information to assist parents and grandparents with family management.
Founded in 2019, Milo has been backed by Y Combinator, the OpenAIStartup Fund, Magnify Ventures and Bronze Ventures.
Speak
Speak is “the language learning app that gets you talking”. Available on the Google Play Store and the Apple App Store, the tool helps users immerse themselves in the world of spoken languages to learn, practice real-life scenarios and receive grammar corrections. Currently supported languages include English, Spanish, French, German, Italian, Japanese and Chinese.
In August 2023, Speak raised a US$16M Series B-2 round, bringing its total funding to US$63M. Its backers include the OpenAI Startup Fund, Neo and GSV.
1X
Video “All Neural Networks. All Autonomous. All 1X speed | 1X Studio”
1X is a humanoid robotics company developing androids capable of human-like movements and behaviors, with an aim to meet the world’s labor demand and enable a more abundant society. EVE, its flagship product, is a wheeled android built to work in logistics and retail with a 14.4 km/h top speed, 15 kgs carry capacity and 6-hour run time.
Founded in 2014 and based in Norway, 1X has most recently raised a US$100M Series B in February 2024, with participation from EQT Ventures. Its Series A was led by Open AI and Tiger Global in March 2023.
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Mem Labs
Mem Labs is the company behind the AI notes app “that keeps you organized”. Its aim is to help users search, ask and reuse their thoughts and ideas without having to do any manual organization. The app, called Mem, can import data in the form of notes, links and websites or external sources such as Notion and Evernote, then organize and highlight the most important things and act as the user’s thought partner to discover past ideas and generate content. Mem X is the app’s version optimized for the business environment and teams.
Based in Los Altos Hills, CA, Mem Labs most recently raised a US$25.6M Series A in November 2022, led by the OpenAI Startup Fund.
Harvey
Harvey is a legal AI assistant which integrates with law firms to help with legal research, due diligence and administrative tasks.
Based in San Francisco, CA, Harvey most recently raised a US$80M Series B in December 2023 co-led by Elad Gil and Kleiner Perkins with participation by the OpenAI Startup Fund and Sequoia. Previously, it raised a US$21M Series A in April 2023 led by Sequoia with participation from the OpenAI Startup Fund, Conviction and SV Angel.
As OpenAI grows in usage and revenue, it is likely it will continue to invest in companies that enable innovative and impactful AI products across Consumer, Enterprise, Developer and Hardware verticals and, by doing so, continue to contribute to the wider ecosystem, too.
More from the Author
I’m very attracted to Alex’s infographics in particular, check out some more of her stellar work:
Market Map: Gen AI Companies with Foundational Models
AWS Amazon’s AI Strategy
Want to work with Alex Irina Sandhu and her market analysis and competitive intelligence strategy consulting? Contact her. She has over 12 years experience leading business and product strategy in tech.
Thanks for reading!
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