OpenAI has changed how Silicon Valley operates, turning the old startup survival game into something far more unpredictable.
The company, which remains privately held and secretive about its finances, has built a reputation for spending other people’s money faster and louder than any tech giant has ever done before.
According to CNBC, its expansion up and down the stack (from massive data centers to coding tools and consumer devices) has left the startup scene struggling to find breathing space.
In less than three years, OpenAI has gone from a startup led by ex–Y Combinator head Sam Altman to a $500 billion heavyweight. It is now building data centers approved by the White House and teaming with Nvidia, the world’s most valuable company.
OpenAI’s flagship ChatGPT chatbot now serves 800 million users every week, while its new Sora video app hit one million downloads in under five days.
At DevDay in San Francisco, attended by around 1,500 developers, Sam announced that Codex, the company’s software engineering agent, is now fully available, and Sora 2 can be accessed through the API.
Investors chase niches as OpenAI dominates every lane
Nina Achadjian, a partner at Index Ventures, said the biggest question for entrepreneurs is, “Where is the white space?” Her firm just led a $25 million round in Quilter, a startup using AI for printed circuit boards, founded in 2019 by ex-SpaceX engineer Sergiy Nesterenko.
Nina described the company as “pretty niche” and “not built on top of any model.” She explained that OpenAI probably won’t compete in such a deep engineering space dominated by firms like Cadence Design and Synopsys, but still, “there is no predictability,” she said. Relative to past cycles, “it’s more opaque and hard to predict which direction those guys are going to go.”
At DevDay, Sam appeared on stage with Jony Ive, the designer behind the iPhone, who joined OpenAI in May as part of a $6.4 billion talent deal to build AI hardware. Jony said his goal was to create tools that “make us happy and fulfilled and more peaceful and less anxious and less disconnected.”
He refused to say what exactly he was building. Still, the company’s nonstop expansion has made it the center of the AI world, much like Amazon in e-commerce, Google in search, Facebook in social media, and Apple in mobile.
Ethan Kurzweil, managing partner at Chemistry Ventures, said, “It’s the fastest-moving time in startup creation and disruption in my 17 years of investing.”
He said OpenAI is rolling out services that compete directly with tools built on top of ChatGPT, and even that hasn’t slowed investment. “There’s a gold rush mentality where a lot of companies will do well,” he said.
AI cash floods the market as moats disappear
At a September event hosted by Chemistry, OpenAI’s COO Brad Lightcap told attendees there are no “technical moats” anymore. Competing models from Anthropic, Google, and Meta prove the fight is about momentum, not technology.
Index Ventures’ Nina said the lack of public oversight gives OpenAI and Anthropic freedom to burn through cash. Anthropic raised $13 billion last month at a $183 billion valuation.
“There’s no reckoning, because none of the companies are public,” she said. “That further fosters the exuberance of capital raising, capital spending and vertical integration.
In the first half of 2025, venture capital growth-stage funding reached $83.9 billion, driven by five billion-dollar AI deals.
On that pace, 2025 will surpass 2021’s record $96.1 billion. “AI continues to dominate the upper end of the deal spectrum,” said a report from Pitchbook and the National Venture Capital Association.
Meanwhile, Exa Labs, founded in 2021, raised $85 million in September at a $700 million valuation from investors including Nvidia. Exa co-founder Jeff Wang said that hobbyists and people building AI products are paying for Exa’s service, and that it’s being used within companies that have specific and “gigantic needs.” “The pie is really big and OpenAI is just one company,” Jeff said.
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