Applied Compute is barely four months old, but it’s already climbing into big-league territory. The AI startup, founded by three former OpenAI researchers, is in discussions for a fresh round of funding that could value the company at $500 million — a fivefold jump from where it stood in June.
The talks, first reported by The Information, involve top venture firms including Benchmark and Sequoia. Benchmark, which led Applied Compute’s $20 million seed round in June at a $100 million valuation, is expected to double down. The new deal would mark a striking rise for a company that only launched in May 2025, underscoring how investors are racing to back anyone with OpenAI on their résumé.
“Applied Compute, founded in May by three former OpenAI staffers, is in talks to raise new funding at a $500 million valuation just three months after a round that valued it at $100 million,” The Information reported.
Applied Compute’s Big Bet: Bringing Reinforcement Learning Into the Enterprise
Applied Compute was started by Rhythm Garg, Linden Li, and Yash Patil — Stanford grads who cut their teeth at OpenAI working on reinforcement learning projects, including the o1 model. They left earlier this year to build a company that applies RL to business automation: optimizing workflows, speeding up decision-making, and reducing inefficiencies.
Their seed raise drew attention not just for its size, but for the options they turned down. Reports at the time said the founders passed on higher offers in favor of Benchmark’s backing, betting on strategic alignment rather than raw dollars. That early valuation of $100 million was unusually high for a startup still pre-launch, but it reflected the pedigree of the team and the fever pitch surrounding AI.
The “OpenAI Mafia” Effect
Applied Compute is the latest in a string of high-profile startups launched by OpenAI alumni — sometimes called the “OpenAI mafia.” Investors see these spinouts as safer bets in a risky market, banking on the founders’ insider experience and technical edge.
The pattern is hard to ignore:
Safe Superintelligence (SSI), led by OpenAI co-founder Ilya Sutskever, was valued at $32 billion in March 2025.
Thinking Machines Lab, founded by ex-CTO Mira Murati, hit a $12 billion valuation in July.
Anthropic, created by siblings Dario and Daniela Amodei, has soared to $183 billion, with backing from Amazon and other tech giants.
Applied Compute doesn’t operate at that scale yet, but its rapid rise fits the same mold. Investors are chasing the next breakout from OpenAI’s alumni network, often willing to pay hefty premiums.
What Comes Next
Negotiations are still ongoing as of late September, and no final terms have been announced. If the round closes at $500 million, it would be another sign of just how aggressively capital is flowing into AI startups despite rising competition and steep infrastructure costs.
The road ahead isn’t easy: compute shortages, regulatory headwinds, and fierce talent wars loom large. But for Garg, Li, and Patil, the early momentum — and the roster of VCs circling — suggests Applied Compute has a real shot at turning hype into durable business.
For now, the startup is a reminder of one thing: the OpenAI diaspora isn’t slowing down. If anything, Applied Compute’s trajectory shows the alumni network is only tightening its grip on the future of AI.