SoftBank has been one of the biggest backers of openAI and some of the moves they are making are….. not very comforting.
Here’s some background:
SoftBank has so far invested almost $65 billion in openAI. They own 13% of openAI, which according to openAI’s last funding round should be worth $100 billion.
Here’s what’s crazy: As openAI is looking to delay IPO, SoftBank is trying to raise $10 billion to invest in openAI, provide them enough cash until eventual 2027 IPO. Last month when SoftBank tried to raise $10 billion with its OpenAI stake as collateral, banks denied them. Banks did not even agree to give them $6 billion in loans on openAI collateral, which on paper is worth $100 billion. This should be extremely concerning. While VCs are pulling high flying numbers out of their ass, banks seem to think 13% of openAI equity is not enough to give SoftBank $6 billion in loans.
SoftBank has now gone back and is trying to raise $10 billion again, but this time is giving banks full recourse into SoftBank itself. That is SoftBank itself is now collateral, not just openAI shares. This reeks of desperation.
Here’s the next part that’s scary: in March 2026, SoftBank took out a $40 billion bridge loan to fund openAI to give it runway until IPO. The plan was to repay this bridge loan with proceeds from
OpenAI IPO. The loan is due in full March 2027. As you can imagine, now that openAI IPO is delayed to 2027, there could be a massive cash crunch for SoftBank early next year as they need to either pay back $40 billion bridge loan or refinance it. OpenAI delaying IPO is a massive problem for SoftBank.
Considering SoftBank is not able to raise even $6 billion with just OpenAI equity as collateral, I don’t know how they will raise $40 billion next year to refinance the bridge loan.
All of this looks like openAI is going to run out of cash early next year and its biggest backer SoftBank will be in a tough spot. The IPO delay cannot be too long before a ton of people that borrowed to finance openAI go bust.
Icing on the cake: a lot of the recent $100 billion raise from openAI was contingent on the IPO. Example, Amazon’s $20 billion investment into OpenAI announced in that round was contingent on the IPO. That’s not happening this year.
I think openAI fundamentally is running out of cash and private investors to back it. Their last ditch effort to get government to give them money, hence the 5% stake offer to US government.
I genuinely want to know if someone here thinks this does not stink to high heaven. To me it looks like the music is about to stop for openAI.