OpenAI launches its own venture capital arm: $400 million bet on next-generation AI startups

Beating AI Express: OpenAI has launched its second Startup Fund, a $400 million vehicle fully funded by the company itself. The first fund, raised in 2021 with $175 million from external investors including Microsoft (with no capital contributed by OpenAI), allowed OpenAI to claim a portion of investment profits, though most economic returns went to limited partners (LPs). Now, by fully backing the second fund, OpenAI will retain most of the investment gains rather than routing them to external LPs. The first fund has invested in 24 companies, including AI coding tool Cursor and legal AI firm Harvey, and has fully deployed its capital. Notably, Cursor was just acquired by SpaceX this month, with the deal carrying an implied equity value of $60 billion. The new fund will continue to focus on early-stage AI startups, planning to invest in 8 to 10 companies annually, targeting direct lead investments. Individual investments start at several million dollars, typically capped at $50 million, with potential for up to $100 million for high-priority projects. Previously, despite bearing the OpenAI name, the Startup Fund relied primarily on external capital. Now that the first fund has delivered results, OpenAI is committing $400 million to continue investing, taking on the risk itself and retaining a larger share of returns.