The University of Michigan invested $20 million into OpenAI early. Now it could make $2 billion.

The University of Michigan made a strategic move by investing $20 million into OpenAI during one of the AI lab's earliest funding rounds. This investment was made prior to Microsoft's significant backing and the launch of ChatGPT, which ignited the current AI surge. Documents related to the ongoing legal battle between Elon Musk and Sam Altman reveal that the university stands to benefit substantially from this early investment. Although specific terms are not disclosed, the university set a target redemption amount of $2 billion, indicating the potential financial windfall from its stake. Michigan's investment was part of a larger group that included notable contributions from Khosla Ventures, LinkedIn co-founder Reid Hoffman's philanthropic fund, a Y Combinator fund, and Gmail creator Paul Buchheit's trust. Microsoft's later investment of $1 billion in 2019 positions the University of Michigan and other early investors ahead in the payout hierarchy, with their redemption amounts also adjusted for inflation. The university’s endowment, valued at a staggering $21.2 billion last year, has a history of investing alongside prominent Silicon Valley venture capitalists, although direct stakes like this are less common. Dan Feder, who oversees the university's venture capital and private equity investments, has shared insights on the challenges and rewards of venture capital investments in discussions with industry leaders. The University of Michigan is not alone in reaping rewards from early technology investments; in 2017, a Catholic high school in the San Francisco Bay Area profited massively from Snap's IPO. This trend underscores the lucrative opportunities available to educational institutions willing to take calculated risks in the tech sector.