For years, there has been speculation about when $100 billion-plus private tech companies like Stripe, SpaceX and Databricks could go public. Now AI darlings OpenAI and Anthropic are on IPO watch. Like every company that takes on significant venture capital, both companies have had early conversations with financial institutions about the possibility of eventually going public, according to our sources. “Talk of a potential IPO or other exit someday helps with late stage fundraising,” said Lise Buyer, partner and founder at Class V Group, an IPO advisory firm, since “people want a return on their dollars.”
For years, there has been speculation about when $100 billion-plus private tech companies like Stripe, SpaceX and Databricks could go public. Now AI darlings OpenAI and Anthropic are on IPO watch.
Like every company that takes on significant venture capital, both companies have had early conversations with financial institutions about the possibility of eventually going public, according to our sources. “Talk of a potential IPO or other exit someday helps with late stage fundraising,” said Lise Buyer, partner and founder at Class V Group, an IPO advisory firm, since “people want a return on their dollars.”
But for the most part, for these mega private tech companies, it’s been all talk and little action. Now Anthropic has taken an early step, with the Financial Times reporting that it has hired Wilson Sonsini for IPO prep. It’s worth noting that law firms are hired very early in the journey, often years before an actual public debut. Industry observers speculate that most likely these AI IPOs won’t happen until 2027 or later.
Anthropic and OpenAI may have more incentive to go public than some of the other businesses that have delayed IPOs. The AI businesses are capital intensive and may want greater access to individual investors and other public funds than other similarly sized startups. The market is also particularly bullish on AI at the moment.
“Clearly they are growing rapidly, clearly they have needs for incremental funds,” said Buyer about the AI sector broadly.
She said that there could be added challenges when OpenAI and Anthropic finally debut, however. Both would likely want to raise large sums of capital, but issuing a huge amount of new shares could be challenging.
“If you flood the market with too much supply, you have the issue of where will subsequent demand come from,” she pointed out.
The cap tables could also get a bit complicated. Ever since the JOBS Act was instituted in 2012, private companies are no longer required to go public once they reach 500 shareholders, as they did in Facebook’s day. As a result, private companies now have thousands of shareholders, who often buy shares via secondary transactions.
This takes off some pressure on a company to go public. But when they do, many will likely want to sell. These startups will need to manage lock-ups, restrictions on when shareholders can sell in an IPO.
Buyer said for these mega companies, should they pursue an IPO, “The overall process of going public is unchanged, but the legal details of getting lockup signatures are significantly more complicated.”
Anthropic surely recognizes that it needs to get its legal team in order.
—Cory Weinberg and Valida Pau contributed to this report.
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