The University of Michigan’s endowment appears to be in for a windfall.
The university made a $20 million investment in the early days of Open AI that is estimated to be worth $2 billion when the company goes to the public market in a likely initial public offering, according to reports citing court documents.
Business Insider reported that documents in Elon Musk’s federal lawsuit against Sam Altman show the university made the investment in Open AI before Microsoft invested $1 billion in 2019. Open AI, which runs ChatGPT, launched in 2022 and could go public in late 2026 or early 2027, according to reports.
The university wasn’t the only early investor, with $50 million coming from Khosla Ventures and the Aphorism Foundation at about the same time.
Musk is suing OpenAI, Altman, its co-founder and chief executive, and its president, Greg Brockman, saying they went back on the intention of OpenAI’s mission to maintain it as a public good for humanity and turned a nonprofit into a for-profit venture. Musk also said he came up with the idea for OpenAI. He is seeking $150 billion in damages that would go to OpenAI’s charities.
“I came up with the idea, the name, recruited the key people, taught them everything I know, provided all of the initial funding,” Musk said in testimony last month. “It was specifically meant to be for a charity that does not benefit any individual person. I could’ve started it as a for profit and I specifically chose not to.”
The details behind Michigan’s investment are in the exhibits of the lawsuit, according to Business Insider. A University of Michigan spokesperson did not immediately return a request seeking comment Saturday morning.
News of the windfall hit social media with enthusiasm, with one poster on X asking, “Best direct investment from an endowment of all time?”
An additional $2 billion in its endowment would be historic and significant for Michigan, which has a $20 billion endowment and $15.6 billion annual operating budget.
Endowments support the work of university campuses, but many funds are tied up with specific funding priorities or were given for specific purposes that can’t be used in other ways.
OpenAI and other AI companies, however, have caused controversy in several spaces, including education, where academic integrity and submitting one’s own, authentic work is of utmost importance. Universities and teachers as individuals have had to work to battle students’ proclivities for the ease of AI.
The data centers that have to be built to maintain the infrastructure of AI have also been wrapped in controversy due to environmental and community concerns. However, the largest proposed data center in Michigan also has ties to the university.
A trio of tech companies — Oracle, OpenAI and Related Digital, a firm with ties to University of Michigan donor and billionaire Stephen Ross — is planning a data center slated for farmland in Saline Township, outside of Ann Arbor. The cost is estimated at over $7 billion. The facility would include three single-story buildings, each sized at 550,000 square feet, on a 250-acre property.
jpignolet@detroitnews.com
This article originally appeared on The Detroit News: Report: UM endowment to get $2B richer thanks to early AI investment
Reporting by Jennifer Pignolet, The Detroit News / The Detroit News
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