Report: OpenAI Plans to Restructure and Become For-Profit Benefit Corporation
OpenAI reportedly plans to restructure its core business into a for-profit benefit corporation that won’t be controlled by its nonprofit board.
Under this plan, the OpenAI nonprofit will own a minority stake in the for-profit company, Reuters reported Wednesday (Sept. 25), citing unnamed sources.
The plan has not been finalized and the timeline for its implementation is uncertain, according to the report.
Asked about the report by Reuters, an OpenAI spokesperson said: “We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission. The nonprofit is core to our mission and will continue to exist.”
The planned restructuring will make the company more attractive to investors, as it would operate more like a typical startup, the report said. OpenAI is also working to remove a cap on returns for investors that it currently has, according to the report.
In addition, the plan would give CEO Sam Altman equity in the for-profit company, per the report.
OpenAI was founded in 2015 as a nonprofit AI research organization and added a for-profit entity called OpenAI LP in 2019 as a subsidiary of the nonprofit, according to the report.
Two of its rivals, Anthropic and Elon Musk’s xAI, are registered as benefit corporations, per the report.
It has been reported in recent weeks that OpenAI is seeking $6.5 billion in funding and a valuation of $150 billion in the funding round. Earlier reports said that the funding round is being led by venture capital firm Thrive Capital; that Microsoft, which has already invested $13 billion in OpenAI since 2019, is expected to participate; and that Apple and Nvidia are in talks to invest in the company as well.
On Sept. 15, it was reported that OpenAI’s $150 billion valuation will depend on whether it can change its corporate structure and remove the profit cap for investors.
The report said that the conditions on the $6.5 billion in funding show the extent of OpenAI’s evolution from a research-based nonprofit and signify the changes it’s willing to make to woo investors to fund its costly efforts in the field of artificial general intelligence (AGI).
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