The OpenAI Drama Review for Pre-Seed Investors

TL;DR: Take a 2-minute break, then get back to work focusing on the founders’ ideas.

Massimo Sgrelli
Lombardstreet Ventures Blog
4 min readNov 20


The news of the week(end) is the OpenAI epopea and Sam Altman being fired by his board of directors out of the blue. Since when, on Friday 17 night, OpenAI posted this on Twitter, the VC and startup sphere went wild:

In Italian popular culture, Friday the 17th — and not the 13th — is considered a bad luck day, so when I read the news, I was probably less shocked than the rest of the world. My first thought was: “Why on Earth did four guys ruling the fastest-growing decacorn in history decide to stop its spectacular take-off abruptly? “

The deja vou was clear for everyone — Steve Jobs, of course — and like in every drama, the lack of significant data about how the board got to this decision left everyone speechless.

The OpenAI and Generative AI exponential growth are very well connected. ChatGPT has been the first worldwide well-known test of this new era of AI everywhere. Independently of Sam Altman returning as the company’s CEO or not, what happened last week has been perceived by many people as a classical “Huston, we have a problem” kind of situation, and Generative AI is part of this equation.

“What now?” — this was everyone’s question.

Will the competition take off, leaving the non-profit/for-profit AI behemoth behind?

What will be the impact on the Generative AI scene?

How bad is the situation?

Then, on Sunday night and Monday morning, a bunch of tweets came out, making the whole thing even more confusing:

The damage has been done, the Pandora vase was open, and you can’t close it anymore. I’m sure that by the time this article is online, more and more gossip will have hit the Twitter-sphere.

The Pre-Seeders

As I observe the situation from my home office across two continents, I ponder its impact on Pre-Seed investors. My conclusion is it would have no impact on us whatsoever.

The real winners of this weekend are Google, Meta, and The Information, which floods everyone’s feeds with breaking news, pushing people to pay its subscription to know more. OpenAI and its investors are the main losers for whom something changed forever.

For us— the Pre-Seeders —this is business as usual.

First, those AI behemoths don’t raise a Pre-Seed round. Second, the first Seed round they raise is at least in the tens of millions of dollars. Definitely not my Seeds!

Those are the guys who buy tens of thousands or even hundreds of thousands of GPUs per year at $30,000 each. They burn capital like crazy to train their models, hoping to monetize their efforts a few years later; otherwise, they will crash and burn spectacularly. Everyone is chasing the OpenAI revenue trajectory, but none has OpenAI timing or computing power.

P.S. To understand what’s happening today in the GPU war, read John Luttig’s article Nvidia Envy: understanding the GPU gold rush. It’s enlightening.

Despite all the confusion, Pre-Seed investors who write checks between $50K and half a million dollars don’t need to worry. We live outside the AI excess, which requires $30M just to start.

What we see today on the US market is that with or without OpenAI/GenAI drama, Pre-Seed and Seed valuations gradually decrease to reach their appropriate levels, where fair deals can be closed quickly at the proper valuation. So, pay attention to those founders who reach out over email, and give them a reply ASAP. Be open to receiving their ideas, and structure the pre-screening process efficiently but without delegating it. Screening founders' proposals is our bread and butter as GPs in a Pre-Seed fund.

At Lombardstreet Ventures, we base our investing decisions on the founding team more than anything else, seeking clear signs of potential, as we wrote in a recent article. We value founders' ability to make things happen quickly, proving their market is authentic. That value doesn’t change over time and during the hype cycles, and if you are smart enough to stay focused and keep screening opportunities day after day, you will find the right one on your desk.

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Massimo Sgrelli
Lombardstreet Ventures Blog

General Partner & Founder @ Lombardstreet Ventures. With a founder-first angle, I invest in pre-seed opportunities from Silicon Valley.