Comment by redanddead
11 hours ago
>3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s
This is a huge problem, why is it like this
11 hours ago
>3. They need revenue yesterday. Increases in borrowing rates means access to capital isn't what it was in the 10s
This is a huge problem, why is it like this
they've borrowed so much they're directly competing with national governments in capital markets.
OpenAI has hardly borrowed anything. They have a $4B revolving credit line but have hardly touched it. They haven't issued any bonds.
Investment isn't debt.
The rates environment directly dictates what capital is available to OpenAI and at what terms. When potential investors can get x% virtually guaranteed, then they are less willing to give cash for equity to OpenAI.
> Investment isn't debt.
...yet.
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The 10s were totally fake due to ZIRP.
> why is it like this
In part it is like this because they've already borrowed so much.
They have borrowed almost nothing.
Investment isn't debt.
Investment isn’t debt, but investment and debt demand revenue in functionally identical ways, and OpenAI has taken an enormous amount of investment, so they are subject to broadly the same pressures as a hypothetical company that had borrowed lots, no?
Isn't investment like a form of debt, or well obligation to make returns?
If VC provide you funds, there is an expectation of returns, otherwise the board would vote you out.
Yeah it's not a traditional loan from a bank, but it's not a 0% interest loan either.
The duopoly AI labs haven't technically borrowed much, but a metric ass-ton of money has been borrowed by various other entities in service of them as infrastructure proxies.
That's what is driving up the cost of debt and teetering some of these companies into junk status.
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