‘I Apologised to LPs for the First Time in 40 Years,’ says Vinod Khosla

Vinod Khosla, co-founder of Sun Microsystems and renowned venture capitalist, revealed that he sent his first-ever apology letter to limited partners (LPs) in his 40-year career after investing $25 million in OpenAI. 

Speaking at the Indian VCs Venture Summit, which took place from November 12 to 14, 2024, Khosla shared that the decision was made when OpenAI was entirely non-profit, had no product, no revenue, and no plan to generate revenue.

The investment secured Khosla Ventures a 5% stake in the AI startup, now valued at $157 billion following its recent $6.6 billion funding. Khosla called it his largest initial investment to date.

“I made the largest bet by a factor of two of any initial investment I’ve made in 40 years,” Khosla said. 

Khosla’s long-term vision for AI extends beyond immediate returns. He predicts that within a decade, AI could lead to “free doctors, free tutors for everybody, and free lawyers.”

The veteran investor also shared his unconventional approach to venture capital, saying, “I look at IRR only at the fund level, never at the investment level. Haven’t seen one IRR number in last 10 years while making investments.”

Despite the initial risks, Khosla’s bet on OpenAI appears to be paying off. The conversation, which also featured Rahul Chowdhri, partner at Stellaris Ventures, discussed topics such as venture assistance, long-term bets, AI predictions, and the operating team models at Indian VCs.

In India, Khosla Ventures has invested in three Indian AI startups, namely Upliance.ai, Sarvam AI and Vahan.ai.

Investment Philosophy of Khosla Ventures 

“We believe AI has the power to disrupt numerous economic models and change the way we lead our daily lives over the coming years. We invest in deep tech and invest where we can be early, bold and impactful” – Khosla Ventures

Vinod is driven by the conviction that technology serves as a powerful catalyst to accelerate societal reinvention in food, health, climate, energy transportation, education, housing finance, media, retail and entertainment for billions around the globe.