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Hi! It's Natasha and Miles. The OpenAI deal that values Jony Ive's artificial intelligence startup at $6.5 billion stands to reward investors in the stealth company handsomely—at least on paper. After becoming one of OpenAI's biggest outside shareholders, Thrive Capital last year invested about $30 million in the device startup, called Io Products, according to a person familiar with the deal. That made Thrive one of the biggest investors in Io, which has been exploring several undisclosed devices powered by OpenAI's technology. Ive's secretive startup, founded last year, hasn't disclosed how much money it raised. But it had told California regulators within a span of eight months that it was planning to raise at least $220 million. These included a $62 million convertible note in April 2024 and a $160 million financing that came together at the end of last year, according to previously unreported filings provided by Prime Unicorn Index. Representatives for Ive and Io declined to comment. Thrive Capital founder Joshua Kushner declined to comment through a spokesperson. OpenAI owns 23% of Io, thanks to a design and development partnership closed at the end of last year. The acquisition terms valued OpenAI's ownership at $1.5 billion, and OpenAI paid another $5 billion in stock for the company, for a total deal value of $6.5 billion. That's a remarkable price for a 55-person business that hasn't released a product or generated revenue. When Facebook bought Instagram in 2012, it also hadn't generated revenue—but it already counted 30 million users. But Sam Altman, OpenAI's co-founder and CEO, has been keen on AI hardware for some time. He and Ive were discussing building an AI device back in 2023, and he also personally invested in Humane, an AI pin maker, which sold to HP for $116 million after investors valued it at about $850 million. Altman doesn't own any of Io, according to an OpenAI spokesperson. The total size of Thrive's stake couldn't be learned. If the New York investment firm owned 10%, the value of Thrive's initial investment would have risen 22 times in about just one year, or an extraordinary 2,067% on an annualized basis. Even if it owned just 1%, the value of its investment would have more than doubled, at an annualized 116%. That compares to one-year returns of around 4%, net of fees, for all venture capital funds last year and 13% over the last 10 years, according to Cambridge Associates. Due to OpenAI's unusual corporate structure, which it is in the process of changing, investors hold capped profit units rather than traditional equity. The all stock deal will presumably slightly dilute the stakes of OpenAI investors. The sale should also reward other investors, including Emerson Collective, the investment firm founded by Laurene Powell Jobs, who has been personally close to Altman and Ive and whose late husband, Steve Jobs, worked with Ive on some of Apple's best-known devices. I'd expect that Sutter Hill Ventures, which is known to incubate companies and write large checks into them, is also one of the biggest investors in the company. Additionally, the OpenAI Startup Fund—which invests money from outside investors rather than the company's balance sheet—has a small stake, according to an OpenAI spokesperson. Other investors include Maverick Capital, the hedge fund founded by former Tiger Management investor Lee Ainslie, Ron Conway's SV Angel and Flat Capital, a Swedish investment firm co-founded by Klarna CEO Sebastian Siemiatkowski and his wife, Swedish entrepreneur Nina Siemiatkowski. For Thrive, the acquisition deepens the firm's investment into one of its largest bets. Under the helm of Kushner, the firm has committed at least $1 billion into OpenAI. Thrive led a tender offer that valued OpenAI at $86 billion in April 2024 and also led a fundraise last fall that valued the ChatGPT maker at $157 billion including the investment. The value of Thrive's investment has increased since then, as OpenAI raised another $10 billion from investors led by SoftBank, which valued the startup at $260 billion before the investment. Thrive participated in that round. Now, on to Miles for a data center scoop Blackstone, KKR and their peers are pouring billions into huge new data centers based on the belief that bigger is better for serving AI. But others think there's money to be made in older, smaller facilities. New Jersey–based Fifteenfortyseven is pitching investors on its third fund for acquiring and renovating old data centers. It's seeking up to $600 million for the fund, double its initial target, according to regulatory filings and marketing materials viewed by The Information. Fifteenfortyseven plans to acquire underutilized data centers, outfit them with modern technology and expand their power capacity. Many of its investments are in carrier hotels, which the firm describes as "key transmission stations within the global digital communications nervous system." These data centers host networking equipment from multiple companies and are usually located at the intersection of several fiber optic cable lines. Carrier hotels tend to be much smaller than the gigawatt-scale data centers companies like Meta Platforms are building for training and running AI. Fifteenfortyseven's facilities handle as little as 2 megawatts by comparison. "As more AI applications move into production, the need for localized data infrastructure closer to where data is generated and consumed will intensify," the marketing materials state. Fifteenfortyseven sees an opening in small facilities because all of the big investors are focused on building giant data centers for companies like Amazon and Microsoft. Blackstone's infrastructure fund now manages about $60 billion, according to its website. That kind of size makes it harder to invest in smaller deals like those Fifteenfortyseven is targeting. The new Fifteenfortyseven fund–which has received $132 million from early investors–has already purchased two sites in Hawaii, which is relatively underserved, and one in Indiana. The latter was originally the state's largest rail hub before being converted to a data center in the 1970s, placing it at the center of several railways flanked by fiber cables. Fifteenfortyseven CEO Todd Raymond did not respond to an email requesting comment. | 
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