Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
During a Y Combinator event on Tuesday night, Sam Altman experienced what YC partner Tyler Bosmini described as a “mic drop moment.” Altman offered $2 million worth of OpenAI tokens to each startup in the current class in exchange for shares in the startup.
In other words, he promised that OpenAI would invest in the entire chapter, not in cash but with an allocation of AI tokens that the startups could use to build their products.
Y Combinator has about 169 startups in this group, according to it guide.
As for the amount of capital each startup can expect to give up, it cannot be determined at the time of signing the deal. It will depend on how much the startup is worth when it raises its first price round – a funding round in which investors assign a formal valuation to the company.
Jared Friedman, managing director of Y Combinator, told TechCrunch that the deal will be offered as an “unspecified SAFE,” meaning it will “convert in the next price round, which is typically a Series A.”
SAFE is YC’s standard agreement structure for early stage companies raising money before their first “priced” rounds with respective valuations. Uncapped SAFE does not put a cap on this valuation, which can benefit founders because the higher the valuation at conversion, the smaller slice of the company the investor receives.
We’ve seen some discussion on
For OpenAI, the deal works on two levels. It clearly acquires shares in this group of companies in their early stages, meaning it makes profits if it succeeds. But it also encourages them to build their businesses on and with OpenAI. Whether or not this will keep them around in the long term, it means they won’t fall behind OpenAI’s competitors, like Anthropic’s Claude Code.
Cryptocurrencies themselves may sweeten the deal further: As inference costs continue to fall, what OpenAI delivers today may cost very little to produce tomorrow — making the shares you receive in return look increasingly cheap.
Not surprisingly, there’s already been a lot of commentary on X about why this is, and it’s not a good deal for startups.
Backers believe the deal helps startups eliminate one of their biggest costs — AI infrastructure bills, which can quickly escalate and consume a disproportionate share of an early-stage startup’s budget at a time when money is already scarce.
Buyer beware people have other caveats. Cornerstone investor Jason Calacanis — who has an accelerator and a competing fund of his own — went on to warn against fear of big tech companies.
“If you take these tokens, there is a non-zero chance that OpenAI will study exactly what your startup is doing, copy your idea and put your app in their free offerings. This is the classic playbook of the platform – be careful, founders!” to publish.
Fear that OpenAI and Anthropic could do this Swallow every good AI startup idea TRUE.
The reality is that if OpenAI wants to do it, it can do it, even when startups simply pay OpenAI for tokens. By taking an equity stake, OpenAI may have more incentive for the startup to succeed, not less.
Plus, as the former president of Y Combinator and a frequent guest speaker, Altman has as much access to every group and their ideas as he wants, deal or no deal.
The biggest question for this YC group is whether the token budget from a single AI player is worth giving up additional royalties. Y Combinator has already taken a 7% stake in exchange for a $500,000 cash investment in its company Record deal. In return, startups gain access to YC’s powerful Silicon Valley network of venture capitalists, potential clients, and other founders.
But stocks are also valuable for startups. Seed investors often take 20% or so as well. Startups need stock as compensation for their early employees.
The biggest risk is that the startup will burn through its OpenAI code budget without enough to show for it, having given up equity in the process. However, this may be better than paying for the tokens in cash, which is a much scarcer resource at that point.
When you make a purchase through the links in our articles, We may earn a small commission. This does not affect our editorial independence.
