On Wednesday, Reuters reported that OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation, moving away from control by its nonprofit board. The shift marks a dramatic change for the AI company behind ChatGPT, potentially making it more attractive to investors while raising questions about its commitment to sharing the benefits of advanced AI with “all of humanity,” as written in its charter.
A for-profit benefit corporation is a legal structure that allows companies to pursue both financial profits and social or environmental goals, ostensibly balancing shareholder interests with a broader mission to benefit society. It’s an approach taken by some of OpenAI’s competitors, such as Anthropic and Elon Musk’s xAI.
In a notable change under the new plan, CEO Sam Altman would receive equity in the for-profit company for the first time. Bloomberg reports that OpenAI is discussing giving Altman a 7 percent stake, though the exact details are still under negotiation. This represents a departure from Altman’s previous stance of not taking equity in the company, which he had maintained was in line with OpenAI’s mission to benefit humanity rather than individuals.
The restructuring would see OpenAI’s nonprofit arm continue to exist but own only a minority stake in the new for-profit entity. Meanwhile, OpenAI is exploring a new funding round that could value the company at $150 billion, according to sources familiar with the matter that spoke with Reuters.
The proposed restructuring also aims to remove the cap on returns for investors, potentially making OpenAI more appealing to venture capitalists and other financial backers. Microsoft, which has invested billions in OpenAI, stands to benefit from this change, as it could see increased returns on its investment if OpenAI’s value continues to rise.
Transformation over time
OpenAI’s journey from a nonprofit research organization founded in 2015 to its current status as an AI market leader has been marked by rapid growth and increasing commercial success. The company added a for-profit subsidiary, OpenAI LP, in 2019 to help fund its research and development efforts. However, the nonprofit board retained full control over the for-profit arm, a structure designed to ensure the company’s focus on developing safe and beneficial artificial general intelligence (AGI).