Even VCs don't get all of their fund money delivered into their bank account when they raise a funding round. It's inefficient and undesirable for everyone involved to have to move all of the money up-front, at once.
If you talk to anyone in startup funding or finance they'll be familiar with the term "capital call" which describes how committed capital obligations are delivered at a later date than the initial deal: https://en.wikipedia.org/wiki/Capital_call
The whole concept of talking about "runway" is basically calculating how much cash in the bank, that is actually in your bank account, will last. And this arrangement is different, as there are contingencies. In the past, VCs would just give you money in a particular series, and then if your business did well, they'd eventually give you more money in a later series. But it wasn't like they announced it all up front in, say, a Series A, but a big chunk of the money would only be delivered if you met milestones.
Funding doesn't work like that. Investors are giving you money as part of a longer-term deal where they stick around.
Obviously this is 1000x as large so I make no claims to knowing that sum. But it’s routine for startup funding to arrive in bank account.
> Nvidia invested $30 billion
> Microsoft, one of OpenAI’s longtime partners, also participated
There is a lot of non-cash, never-will-be cash, investment here. Credits for compute.
This is perhaps because the most common round to raise is a small/early one, and these tend not to have hurdles. Founders that only ever raised these rounds wouldn't necessarily know what happens in later/bigger rounds.
Also, I wonder if capital calls come with hurdles as well? That is, can an LP refuse to put in more money if the VC's recent investments have not done well? I would think not, since it typically takes many years to determine whether investments were good or not.
1) For a $100bn round, you won't get a single transfer of $100bn into your checking account, this is normal
2) Sam Altman is a liar and people (correctly) don't really believe him when he starts throwing numbers around
Maybe it makes sustainable sense but in the world of venture capital it seems the most profitable thing to do is lie through a Cheshire grin, every day.
> YC invests $500,000 in every company on standard terms. Our $500K investment is made on 2 separate safes:
> We invest $125,000 on a post-money safe in return for 7% of your company (the "$125k safe")
> We invest $375,000 on an uncapped safe with a Most Favored Nation ("MFN") provision (the "MFN safe")