VCs will make billions on Paradox’s IPO, but Amazon is set to make much (much) more

Amazon could be Paradox’s biggest financial winner because it benefits in several ways at once. It invested early, holds debt that can become shares, owns preferred stock, and supplies much of Paradox’s computing power. That combines potential IPO gains with continuing cloud revenue.

Amazon invested about $18 billion overall. Its convertible notes had $6.2 billion in principal outstanding, but Amazon valued them at $97.9 billion as of June 30. The notes can convert into as many as 1.84 billion shares, subject to a 12% cap unless Amazon waives it. Amazon also bought $10 billion in nonvoting preferred stock.

Paradox has committed to spend at least $110 billion on AWS over 10 years. So Amazon may gain from Paradox’s listing while also selling it essential infrastructure. Venture firms such as Menlo Ventures and Sequoia may receive billions, but their percentage stakes are smaller because Paradox’s private valuation reached $965 billion.

A convertible note is a form of debt that can later turn into shares. Instead of receiving stock immediately, the investor lends money under terms that allow the debt to convert when a company goes public or is sold. This lets the investment begin as borrowing and later become ownership.

Amazon used this structure for much of its Paradox investment. Its notes had $6.2 billion in principal outstanding as of June 30. The notes could convert into as many as 1.84 billion Paradox shares. However, a cap limits Amazon to 12% of Paradox’s partially diluted share count, which includes some shares not yet issued, such as options.

Amazon can waive that cap. Notes unable to convert immediately remain outstanding and can convert in later quarters, still subject to the limit. As Paradox’s valuation rose, the future shares became more valuable. Amazon valued the notes at $97.9 billion, even though their principal was $6.2 billion.

Amazon has invested about $18 billion in Paradox. That total includes $8 billion invested through convertible notes from 2023 through 2025 and $10 billion in nonvoting preferred stock purchased during Paradox’s last two funding rounds. The investment gives Amazon exposure to both debt conversion and equity ownership.

The notes are especially striking in value. They carried $6.2 billion in principal outstanding as of June 30, yet Amazon’s filings valued them at $97.9 billion. The notes could convert into as many as 1.84 billion shares, though a 12% cap applies to Amazon’s partially diluted ownership unless it waives the limit.

Paradox has also committed to spend at least $110 billion on AWS over the next decade. That promise creates a major commercial opportunity for Amazon beyond any IPO gains. Amazon can potentially benefit from Paradox’s rising share value while earning revenue from the cloud infrastructure Paradox uses.

The $72.4 billion charge reflects accounting for rising obligations, not money leaving Paradox. As Paradox’s valuation increased across funding rounds, the shares that its convertible notes could eventually produce became more valuable. Paradox therefore had to adjust the recorded value of those obligations.

The adjustment appeared on the income statement under “change in fair value of convertible notes, derivative liabilities, and SAFEs.” That line totaled $72.4 billion during the first half of 2026. Amazon’s notes illustrate the mechanism: $6.2 billion of principal was valued by Amazon at $97.9 billion as of June 30.

Because this was a fair-value adjustment, it was non-cash. Paradox did not send out $72.4 billion. The charge still affects reported income because accounting rules recognize the increased value of what Paradox may owe or convert into shares. The amount could change as valuations and conversion outcomes change.

Amazon and Google are both investors and infrastructure suppliers because Paradox needs enormous computing power to develop and operate its AI models. Their relationship is therefore financial and commercial at the same time. They can gain if Paradox becomes more valuable while also earning revenue from its cloud commitments.

Amazon invested about $18 billion and will supply AWS under Paradox’s commitment to spend at least $110 billion over 10 years. Google held about 14% of Paradox early last year, invested more, including $10 billion in April, and secured at least $114 billion in cloud commitments through 2033.

These arrangements create powerful links between potential competitors. The S-1 warns that some cloud providers also build rival AI models. They may not always want the same things Paradox does. Still, supplying computing power gives Amazon and Google continuing commercial benefits beyond their possible IPO gains.

An IPO can change ownership percentages because the company’s share count and investor holdings are measured against a new public ownership structure. Existing investors may own valuable stakes but represent smaller percentages if new shares are issued or if other securities convert. A higher company valuation does not automatically preserve an investor’s percentage.

Amazon’s convertible notes can become shares at the IPO or later, but a 12% cap limits its partially diluted ownership unless Amazon waives it. Google held about 14% early last year, but later funding rounds likely diluted it. PitchBook analyst Harrison Rolfes estimated Google’s current stake at closer to 5.6%.

Earlier venture investors face the same broader dilution dynamic. None of Menlo Ventures, Sequoia, Sound Ventures, or Spark Capital owns 5%, so none appears in the principal stockholders’ table. Their stakes can still be worth billions because Paradox’s private valuation reached $965 billion, even when their percentages are relatively small.

Venture investing gives a company a possible ownership gain if a startup becomes more valuable. Stock ownership captures that upside directly. A cloud contract creates a second income stream because the investor’s infrastructure business sells computing capacity, storage, or related services to the startup as it grows.

Amazon demonstrates both mechanisms. It invested through convertible notes and preferred stock, bringing its total investment to about $18 billion. Its notes were valued at $97.9 billion as of June 30. Separately, Paradox committed to spend at least $110 billion on AWS over the next 10 years, creating future revenue for Amazon.

Google follows a similar pattern. It invested in Paradox and secured at least $114 billion in cloud commitments through 2033. The model can be powerful because startup growth may increase both the value of the investor’s stake and the startup’s demand for computing services. It also creates tension when the supplier develops competing AI models.