OpenAI is offering private equity firms a guaranteed minimum return of 17.5% on new joint ventures. This has drawn comparisons to the Terra Luna collapse from crypto industry leaders and Wall Street veterans.
Nansen CEO Alex Svanevik and former BlackRock portfolio manager Edward Dowd question the sustainability of the structure.
Why a 17.5% Floor Triggered Alarm Bells
Reuters reported that the deals target firms including TPG, Advent International, Bain Capital, and Brookfield Asset Management.
Each would receive preferred equity in a joint venture valued at approximately $10 billion, with the PE firms committing around $4 billion.
OpenAI added the guaranteed 17.5% floor return and early access to unreleased AI models to accelerate deal closings. The rate sits well above typical preferred equity instruments.
It arrives as the company’s projected 2026 losses reach $14 billion, according to internal documents reported by The Information.
OpenAI’s annualized revenue run rate hit $20 billion by the end of 2025, a 233% surge from the prior year, but spending continues to outpace earnings.
The skepticism is not confined to social media. At least two private equity firms declined to participate in either the OpenAI or Anthropic joint ventures, citing concerns about the economics and profit profile.
Thoma Bravo, one of the largest software-focused buyout firms globally, pulled out after its managing partner, Orlando Bravo, questioned the long-term returns of AI joint ventures. They noted that many of its portfolio companies already deploy AI tools without committing venture capital.
The Terra Luna Comparison
Nansen CEO Alex Svanevik likened the 17.5% figure to the May 2022 collapse of the Terra ecosystem.
“we’re at the Terra Luna stage of OpenAI,” remarked Alex Svanevik.
Anchor Protocol, the yield engine at the center of the Terra network, offered depositors roughly 19% to 20% on the algorithmic stablecoin UST.
“…a decentralized money market that provisions a stable 20% APY to depositors…,” read an excerpt in their Medium post back then.
When confidence broke, and withdrawals surged, UST lost its peg. LUNA hyperinflated. Over $40 billion in value vanished within days.
The structural parallel is specific.
- Both cases involve above-market, guaranteed yields
- Offered by entities that spend far more than they earn
- Dependent on continuous capital inflows to sustain operations.
In crypto terms, guaranteed yield combined with heavy losses has historically preceded systemic stress.
“Very expensive capital…screams of desperation. Nothing screams bubble trouble more than this,” stated Edward Dowd, former BlackRock portfolio manager.
Where the Comparison Breaks Down
OpenAI generates real revenue. Its $20 billion annualized run rate by end of 2025 reflects growing enterprise adoption across sectors.
“While revenue followed the same curve, growing 3X year over year, or 10X from 2023 to 2025: $2B ARR in 2023, $6B in 2024, and $20B+ in 2025. This is never-before-seen growth at such a scale,” read an excerpt in the company’s recent report.
Terra had no equivalent revenue base. Its yield depended entirely on speculative inflows and algorithmic minting mechanics.
- OpenAI also operates within traditional corporate finance structures.
- The PE joint venture uses preferred equity with priority returns, a standard instrument in private markets.
The 17.5% floor is aggressive, not fraudulent.
However, the competitive pressure complicates the picture. Anthropic is pursuing a nearly identical PE strategy with Blackstone, Hellman and Friedman, and Permira, but without a guaranteed return.
The fact that OpenAI felt compelled to add the floor, and that established firms like Thoma Bravo still walked away, suggests the capital race is tightening faster than revenue can follow.
It suggests a broader shift, with AI development entering a phase where financial engineering matters as much as model performance.
Will the 17.5% guarantee prove to be a shrewd distribution play or is it the first crack in an overheated cycle?
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It all depends on how fast OpenAI can convert PE portfolio access into paying enterprise contracts before the $14 billion in projected 2026 losses erode investor confidence further.
Crypto veterans who watched Terra’s 19% yield attract billions before it vaporized them, say the pattern feels familiar.
The scale is different. The question is whether the ending will be too.
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The post Why OpenAI’s 17.5% Guaranteed Return Sparks “Terra Luna” Comparisons appeared first on BeInCrypto.
