At a Y Combinator event on Tuesday night, Sam Altman had a standout moment. He offered $2 million worth of OpenAI tokens to each startup in the current class in return for equity. In essence, OpenAI committed to investing in the entire class with AI tokens rather than cash, enabling startups to use these for product development.
Y Combinator includes approximately 169 startups in this cohort. The equity each startup surrenders cannot be determined at the deal’s signing; it depends on the startup’s valuation during its first priced round. Y Combinator Managing Director Jared Friedman mentioned that the deal is presented as an “uncapped SAFE,” which will convert at the next priced round, generally the Series A. This setup does not cap valuation, potentially benefiting founders, as a higher valuation yields less equity for the investor.
Conversations on X suggest this deal might mean OpenAI holds about 2% equity if a startup reaches a $100M valuation, though details are unconfirmed. For OpenAI, the strategy serves dual purposes: gaining equity in promising startups and encouraging them to build with and on OpenAI’s platform, potentially preventing default to competitors like Anthropic’s Claude Code. The decreasing cost of inference may make OpenAI’s token offering increasingly economical over time.
Opinions on X are divided about the deal’s advantages for startups. Supporters argue it alleviates AI infrastructure costs, a significant burden for early-stage startups. Critics, like seed investor Jason Calacanis, caution that OpenAI might replicate a startup’s innovation and integrate it into their own offerings.
The threat of OpenAI overshadowing AI startup ideas is valid. By acquiring equity, OpenAI might prioritize a startup’s success. Altman, being the former Y Combinator head, retains access to each cohort’s ideas, regardless of this deal. The pressing question is whether tokens from one AI player are worth the extra equity, considering Y Combinator already takes a 7% stake for $500,000. Equity is crucial for startups to offer to early employees and for investor portions, generally around 20%.
The risk is that a startup might exhaust its OpenAI tokens without substantial progress, after giving up equity. Nonetheless, this could be preferable to buying tokens with cash, which is even scarcer at this stage.