News broke today that SSI (Safe Superintelligence), Ilya Sutskever’s new AI startup, has raised $1 Billion at a $5 billion valuation.
SSI was started 3 months ago. Ilya Sutskever is OpenAI’s former chief scientist. He left OpenAI after concerns about the direction of OpenAI.
Ars Technica -> Sutskever strikes AI gold with billion-dollar backing for superintelligent AI | Ars Technica
There are, obviously, some very shocked people. A 3 month old startup, regardless of the pedigree of the co-founder, raising $1 billion at a $5 billion valuation has no precedent. In this post we will explain why this is not a crazy valuation.
Ilya Sutskever is perhaps the most Prized Researcher in all of AI
He was the Chief Scientist at OpenAI and can claim to be as responsible as anyone for OpenAI reaching a $100 billion valuation.
It is not impossible that his new company reaches a similar or higher valuation. In fact, given the massive amount of liquidity in AI funding, it is very likely that his new company will reach a $100 billion valuation.
In that environment, investing $1 billion at a $5 billion valuation for 20% of SSI is a very smart funding move.
The Most Likely Scenario – SSI becomes a $100 Billion Company
The $1 billion investment becomes $20 billion.
This is the most likely scenario because of how hot AI is, and because by focusing on a very long term goal (Safe Superintelligence), SSI have completely removed all pressure and milestones.
As Silicon Valley jokes – the best time to raise funds is pre-revenue. You can sell anything. The next few rounds will be raising money at higher and higher valuations – Based on the promise of SSI achieving Safe Superintelligence. The seed round investors will have ample opportunities to sell some/all of their stake at very high valuations.
The Best Case Scenario – SSI becomes a $1 Trillion to $10 Trillion Company and ONe of the Top 5/Top 10 Winners in AI
The $1 Billion Investment becomes $200 Billion to $2 Trillion.
It is a once in a life time investing opportunity for anyone with $1 billion to spare.
The Worst Case Scenario – SSI fails
The $1 Billion Investment goes up in smoke. It’s just $1 billion. Lots and lots of Investment Funds and VCs can spare a billion. Even many billionaires can afford to burn $1 billion for such an asymmetric risk to reward opportunity
You yourself would invest $1 Billion at a $5 Billion valuation if you had $1 Billion lying around
If you had upwards of a $5 billion net worth, with $1 billion available to invest. If you had the chance to invest in a company which
- Most likely will shoot to $100 Billion Valuation
- Has a shot at achieving $1 Trillion to $10 Trillion Valuation
You would happily invest $1 billion. These kind of investment opportunities are asymmetric risk to reward and almost never show up. SSI is working on solving (as they put it) -> The most important technical challenge of our age.
If they succeed, the $1 billion you invest will become worth more than the richest man on the planet.
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