OpenAI has laid out a plan to revamp its corporate structure next year, saying it would create a public benefit corporation to manage its growing business and ease restrictions imposed by its current nonprofit parent.
Rumors have circulated that OpenAI was in the process of become a for-profit companybut this is the first time he has publicly detailed the proposal.
Under the proposed structure, the public benefit corporation, which is a for-profit corporate entity, will manage and control OpenAI’s operations and business, while the nonprofit organization will hire a leadership team and staff for charitable initiatives in sectors such as healthcare and education. and science.
This new structure will give much more control to the for-profit branch of OpenAI. In a blog post, the company said it is “a stronger nonprofit backed by the success of for-profit organizations.” OpenAI added that the structure will allow it to “raise the necessary capital” like other companies in this space.
OpenAI, the creator of the extremely popular chatbot ChatGPT and one of the most valuable startups in the world, started in 2015 as a research-focused nonprofit.
But over the past year, it has been looking to make structural changes to attract more and more investment to fund its expensive pursuit of artificial general intelligence (AGI), or AI that it claims will surpass human intelligence.
OpenAI’s latest $6.6 billion funding round, at a valuation of $157 billion, hinged on whether it could change its corporate structure and remove a profit cap for investors.
“Investors want to back us but, at this scale of capital, they need conventional capital and less structural customization,” OpenAI said in the blog post.
Microsoft is the largest investor in OpenAI, with a 49% stake, but this structure becomes complicated when OpenAI becomes a for-profit company. Both companies have hired investment banks to guide them through the process and help determine how much stake Microsoft will own in a newly structured OpenAI. according to the Wall Street Journal.
OpenAI’s rivals in the generative AI space include xAI, owned by Anthropic, and Elon Musk, which use the same public benefit corporation structure. OpenAI said that shifting its business to this structure will help it compete better.
“The hundreds of billions of dollars that major companies are now investing in AI development show what it will really take for OpenAI to continue its mission,” OpenAI said in the blog post. “Once again we need to raise more capital than we had imagined.”