New Delhi: Something prompted Anthropic and OpenAI to suddenly clarify on 11 May that the two AI giants did not consider any unauthorised stock transfers to be valid.
The clarifications came shortly after a tweet by an X user @asharoraa, who, in a now-deleted post, wrote, “Simply brokering an Anthropic secondary deal made me more money than my entire net worth from working in my 20s. This is insane.”
Arora, ‘a venture capitalist and technology advisor’ as per her LinkedIn profile, studied at the Lady Shri Ram College for Women in Delhi. She works at LocalGlobe, a London-based venture capital firm, and has been mentioned in the Forbes 30 Under 30 list in 2024.
Whether it is her tweet that may have led to the two AI companies’ clarifications is unclear. But the clarifications themselves had a significant impact.
“Any sale or transfer of Anthropic stock, or any interest in Anthropic stock, that has not been approved by our Board of Directors is void and will not be recognized on our books and records,” Anthropic stated.
Soon, OpenAI also issued a statement: “All OpenAI equity is subject to transfer restrictions. This means that OpenAI equity cannot be directly or indirectly transferred unless the seller first obtains OpenAI’s written consent. Any attempted transfer that does not follow this requirement is void.”
The two statements had a huge impact on the pre-market stock and token markets (a digital marketplace where crypto tokens are bought and sold).
Anthropic and OpenAI are not public companies yet; they have not had an Initial Public Offering (IPO) through which a private company raises capital by selling shares to the public for the first time.
Therefore, to own any shares of Anthropic, an investor must buy the stock via secondary markets where existing stock of the company could be sold by employees or early investors. However, the demand for shares in Anthropic has risen drastically.
“Everybody wants to be part of a generational opportunity in AI, and right now, Anthropic is in the pole position,” Glen Anderson, CEO of Rainmaker Securities, a merchant bank focused on private securities transactions, told Business Insider.
How SPVs and pre-IPO tokens work
What generally happens in such pre-IPO trading is that directly transferring shares involves complex legal procedures and is also difficult due to the restrictions by the company. Well-known companies are also unwilling to allow a large number of minority shareholders.
Instead, they establish a Special Purpose Vehicle (SPV), a legal entity, for a specific transaction or investment. Investors can hold shares of the SPV, which then invests in the larger company.
In the case of Anthropic and OpenAI, let’s imagine that an SPV is set up, where smaller investors can buy shares and get derivative tokens (a legal claim on the economic benefit of the SPV). However, if that SPV’s shares are invalidated by the two AI companies, then the ‘tokens’ held by smaller investors would have no value.
The reason Anthropic and OpenAI’s recent clarifications sent ripples through the pre-market valuation is that they said they won’t recognise ‘unauthorised’ stock transfers.
“We do not permit special purpose vehicles (SPVs) to acquire Anthropic stock and any transfer of shares to an SPV are void under our transfer restrictions. Offers to invest in Anthropic’s past or future financing rounds through an SPV are prohibited,” Anthropic added.
Amid this, the key to note is that many investors who buy pre-market stock tokens from SPVs think that they are buying actual company shares. The reality is that many SPVs don’t even directly hold original shares of Anthropic. Instead, they have invested in other SPVs, which claim to hold shares of the AI giant.
Also read: PCOS to PMOS. What the name change means for patients
Why do investors face risk?
The bottom line is that SPVs, by their structure, are dangerous. It lacks transparency as investors can no longer confirm whether the chain of SPVs legally owns shares with approval from the company’s board of directors.
Additionally, SPVs are known to charge management fees, performance fees, and other dividends, exploiting their investors.
It would not be in the larger interest of Anthropic and OpenAI to see investors lose money if such SPV shares are invalidated at any level.
However, following their clarification, on PreStocks, a trading platform for pre-IPO companies, Anthropic plunged by 20.62 per cent, dipping as low as $1,000. OpenAI fell to $1,440, down 26.82 per cent, as per Kucoin.
Investors who choose to stay invested in the pre-IPO markets face huge risks since it may be hard to confirm whether they have a right to the shares they have invested in.
(Edited by Ratan Priya)