⭕ The Great OpenAI Circular Fundraising

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In today’s newsletter I discuss the great OpenAI circular fundraising, content creator Amelia Dimoldenberg launches Formula 1 ‘Passenger Princess’ YouTube series, Uber has found a way to entertain their gigworking drivers when they’re not driving, Coinbase has acquired the onchain capital raising platform Echo for approximately $375 million dollars, Spotify has partnered with Sony Music Group, Universal Music Group, and Warner Music Group to create new AI music products (I’m sure that will sound great), and Apple and Formula 1 have announced a five year United States media rights deal for all F1 races beginning in 2026, with Apple paying approximately $140 million dollars per year for the rights.

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⭕ The Great OpenAI Circular Fundraising

OpenAI's massive capital raising is not a conventional fundraising effort. It is a highly complex, multi-party financial strategy, sometimes referred to as circular financing, designed to secure the immense, and currently scarce, computing power needed for its next-generation AI models. This strategy is centered on its $500 billion Stargate supercomputer project.

OpenAI is the lead partner in the Stargate Project, a joint venture with SoftBank, Oracle, and others, with an announced goal to invest up to $500 billion in U.S. AI infrastructure by 2029. The project aims to deploy at least 10 gigawatts (GW) of AI data center capacity; equivalent to multiple large power plants, to train and run its frontier models.

This colossal spending is necessary because the scarcity and cost of high-end AI chips (GPUs) are the primary bottlenecks to advancing AI and achieving Artificial General Intelligence (AGI). Nvidia, the dominant AI chip supplier, has committed to investing up to $100 billion in OpenAI over time. This investment is progressively tied to deployment milestones. As OpenAI builds out its massive data centers, Nvidia’s capital helps fund those very facilities.

In turn, OpenAI commits to filling these new data centers (at least 10 GW worth) with millions of Nvidia systems and chips, effectively guaranteeing a massive, long-term revenue stream for its investor, Nvidia. This arrangement provides OpenAI with guaranteed, prioritized access to the most advanced and scarce Nvidia GPUs, while providing Nvidia with a financial stake in its most prominent customer and cementing its hardware as the backbone of the future AI industry.

OpenAI signed a separate, monumental deal with Oracle Cloud Infrastructure (OCI), estimated to be worth up to $300 billion in cloud computing power over approximately five years. Oracle is a core partner in the Stargate Project, overseeing the build-out of major data center campuses (like the flagship site in Abilene, Texas), providing the physical and cloud infrastructure where OpenAI's AI supercomputer will run.

To diversify its supply and create a competitive chip landscape, OpenAI struck a major deal with AMD for the deployment of 6 GW of its chips. As part of this deal, OpenAI was granted warrants that could give it up to a 10% equity stake in AMD, further aligning its success with the chip supplier's performance.

OpenAI is using its funding to buy cloud capacity from Oracle, and Oracle, in turn, spends billions buying Nvidia and AMD chips to fill its data centers for OpenAI's use. This creates a powerful, interconnected flow of capital that is fueling the entire AI infrastructure boom.

So hopefully that all makes sense, and it’s as clear as mud. I think they lost me somewhere around Nvidia investing $100 billion dollars in openai, which openai then is using to buy $100 billion dollars worth of Nvidia chips. Seems a little sus to me. 

What is clear is we’re seeing that OpenAI isn't just traditional fundraising; it's a brilliant, interconnected strategy designed to bypass the bottlenecks of AI compute. By securing massive investments from giants like Nvidia—who then become both investors and suppliers—and locking in unparalleled cloud capacity from Oracle, which in turn fuels purchases of chips from both Nvidia and AMD, OpenAI has engineered a unique circular financing model. This complex dance of capital ensures they have the cutting-edge hardware and infrastructure necessary to build the AI future, creating a powerful, mutually beneficial ecosystem that is driving the entire AI industry forward at an unprecedented pace. It’s a testament to the immense value and ambition behind the race for advanced AI.

Quick Hits

🛌 Business

Another week, another cheeky economy term to describe the current job market. Ed AlHussainy, a strategist at Columbia Threadneedle Investments, describes the current labor market as "bed rotting" to describe how the job market is atrophying with employers reluctant to make major hiring commitments. That explains why my LinkedIn feed is full from colleagues who’s looking for work, but no one seems to be hiring.

🛻 Entertainment

British creator Amelia Dimoldenberg, known for her ‘Chicken Shop Date’ YouTube series where she interviews famous people and goes on a tongue-and-cheek date with them at a Chicken Shop, has launched a four part F1 series called ‘Passenger Princess’, where she gets driving lessons from Formula 1 drivers including George Russell, Oscar Piastri, Ollie Bearman, and Carlos Sainz. The premier video has the Team Mercedes driver George Russell being the first driver to try and teach Amelia Dimoldenberg how to drive. Since Amelia Dimoldenberg is an Internet famous content creators known for trying to date everyone she interviews, I can’t wait to see how her driving lessons from Formula 1 drivers goes.

🤖 AI

Uber announced a US pilot program that will let drivers and couriers earn supplemental income by completing digital tasks like recording speech samples and uploading images. The tasks, which include data labeling and annotation for AI models, are designed to be completed in the Uber driver app during downtime, with pay varying by task complexity. By leveraging its global workforce for the AI training, Uber is expanding income opportunities for their gigworkers whole enhancing their homegrown AI models. Looks like a win-win for the machines, ah…I mean workers.

🪙 Crypto

Coinbase acquired the onchain capital raising platform Echo for approximately $375 million dollars, comprised of a mix of cash and stock. Echo has helped projects raise over $200 million dollars through approximately 300 completed deals, and this acquisition allows Coinbase to offer a full stack solution for token issuers. Given the $375 million dollars price tag that Coinbase is paying for Echo, hopefully the "future of onchain capital formation" is at least more profitable than past crypto projects.

🎶 Music

Spotify has just revealed a massive push into artificial intelligence, forging a major partnership with industry heavyweights Sony Music Group, Universal Music Group, and Warner Music Group to create new AI music products. Spotify revealed that has removed over 75 million spammy tracks from its platform in 2024 alone. No wonder all new music sounds the same to me - that and I’m a 48-year oldman who’s musically tastes are stuck in the ‘90s.

🏁 Sports

Apple and Formula 1 announced a five year United States media rights deal for all F1 races beginning in 2026, with Apple paying approximately $140 million dollars per year for the rights. Formula 1's president and CEO Stefano Domenicali called the partnership "incredibly exciting." As a part of the deal current F1 TV subscribers (me) will get the same great experience if you’re an Apple TV subscriber for the low-low cost of only $12.99 dollars per month. As long as they keep Jolyon Palmer and David Coulthard as commentators on F1 TV’s feed then I’ll watch them anywhere.

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The Business Behind The News is written, edited, and published by Chris Thompson.