“Institutional investors are getting much more aggressive,” Brianne Lynch, head of market research at EquityZen, said in an interview. Transactions between retail investors in artificial intelligence companies also increased from May to June, she noted.
Rainmaker co-founder Glen Anderson noted that the number of buyers is outpacing those looking to sell, driving prices well above previous financing rounds. Anthropic bidders are willing to pay a premium of up to 25% in his recent round, while OpenAI’s bids are in the $80s for what he believes compares to a previous round priced at $67, said.
Forge Global Holdings Inc. has seen a surge in company demand for AI on its platform since last year, with Microsoft Corp.’s investment in OpenAI in January and a funding round for Anthropic among key drivers. In June, buying interest in a group of seven AI companies, including OpenAI, hit the highest level during the period, data provided by the firm shows.
The scramble for AI startups is in stark contrast to the general trend of startups trading at massive discounts in this corner of the market. Here, cash-strapped founders, employees and investors are under pressure to sell shares amid a wave of tech job cuts, a tepid market for initial public offerings and rising interest rates.
For AI it’s a different story, the sector has captivated billionaire investors like Steve Cohen, Stan Druckenmiller and Lee Ainslie, and pushed companies to consider how to implement the technology.
While AI is a thriving industry with potential for growth and growing investor interest, it is still in its early stages, so many companies do not yet have strong financial reports to go public.
That leads to pent-up demand in this secondary market, EquityZen’s Lynch said, “because investors know these IPOs aren’t happening anytime soon, so they can’t access them that way.”