The University of Michigan made a very good bet on OpenAI very early on.
Investors running public school endowments put $20 million into one of the AI Institute’s early fundraising efforts, according to documents in the ongoing lawsuit between Elon Musk and Sam Altman. The University of Michigan moved in before Microsoft invested billions in OpenAI and before the modern AI boom began with the release of ChatGPT. Ann Arbor schools intend to build wealth.
Although the exact terms of Michigan’s stake are unclear in this document, the university is taking a significant stance. When contributing $20 million, the company set a “repayment target amount” of $2 billion. That’s how much universities aim to earn from OpenAI.
The university’s $20 million stake arrives in the same initial cluster as a $50 million investment from Khosla Ventures and LinkedIn co-founder Reid Hoffman’s venture philanthropy fund, the Aphorism Foundation. The batch also includes $10 million from a Y Combinator fund and $3 million from Gmail creator Paul Buchheit’s trust. Microsoft’s $1 billion injection in 2019 came after that, according to documents.
The University of Michigan and other early investors will receive priority over Microsoft in OpenAI’s payment order, according to the document. Their “target redemption amount” also increases with inflation.
The University of Michigan and OpenAI did not respond to requests for comment from Business Insider.
It is common for endowments to invest with Silicon Valley venture capitalists, but direct funding is rare. Michigan’s endowment is huge, valued at $21.2 billion last year, and includes investment from Sam Altman and his brother Jack Altman’s venture fund.
Dan Feder, head of venture capital and private equity investments for the university endowment, joined Jack Altman’s podcast last June. Feder said venture capital is a “pretty terrible space to invest in unless you’re investing and getting exposure to really important underlying companies.”
“In that case, obviously that’s a very good thing,” Altman replied.
“Very good. Very, very good,” Feder said.
The University of Michigan wasn’t the only school to cash in on early technology investments. In 2017, a Catholic high school in the San Francisco Bay Area made a $24 million profit from the Snap IPO.
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Correction: May 8, 2026 — A previous version of this article incorrectly stated how much Catholic High School made in the Snap IPO. It earned $24 million.