Investors warn AI FOMO could be fueling a risky bubble in companies like OpenAI and Anthropic

As valuations of AI companies soar into the hundreds of billions, a surge of special purpose vehicles (SPVs) has emerged, sparking concerns among investors that a bubble may be forming in the AI sector. SPVs allow investors to pool resources for specific deals, but their increasing prevalence is raising alarms about transparency and potential scams. Bill Gurley, a well-known venture capitalist associated with major firms like Uber and Grubhub, cautioned against these investment vehicles, stating, "Friends don't let friends buy SPVs." He noted that many deals appear suspicious, with high fees and complex structures obscuring the true nature of investments. OpenAI recently issued a warning regarding unauthorized SPVs, urging potential investors to exercise caution. They emphasized that offers claiming to provide access to their company could result in worthless investments. Similarly, Anthropic has expressed discontent with the widespread use of SPVs during their latest funding round, advising some venture capital firms to refrain from utilizing them. Many investors and founders are reporting a flood of unsolicited pitches for SPVs linked to leading AI startups. Ankur Nagpal, founder of a personal finance company, described the phenomenon as a modern-day racket, where investors are charged exorbitant fees for access to investments that may not yield substantial returns. Leslie Feinzaig, a venture capitalist, likened the current situation to the "wild west," filled with hype and unrealistic expectations about AI's potential. Mark Klein, CEO of SuRo Capital, noted that he observed an alarming trend when attempting to invest in OpenAI, with each deal appearing more dubious than the last. The chaotic environment surrounding private funding rounds often leads to fear of missing out (FOMO), resulting in questionable investment decisions. The fees associated with these SPVs can be staggering, with some investors reporting management fees as high as 16% or even 20%. This can erode potential profits significantly, raising concerns about the accessibility and fairness of these investment opportunities. Investors often do not fully grasp the layered fee structures, leading to a lack of clarity about their actual returns. While some investors defend SPVs as legitimate avenues for broader access to companies, the risks associated with multilayered SPVs are significant. As this investment landscape continues to evolve, many fear that the current rush to invest in AI could lead to substantial financial losses if the anticipated boom does not materialize. The sentiment among some investors is that the rapid influx of capital into AI could result in a bubble that, if it bursts, would leave many unprepared for the fallout.