ChatGPT-maker OpenAI is reportedly transitioning from a non-profit to a for-profit benefit corporation. The AI startup’s CEO Sam Altman could receive equity in the newly structured company.
What Happened: OpenAI is revamping its business structure to make it more attractive to investors.
The non-profit board will no longer govern the company, although the non-profit entity will retain a minority stake in the for-profit company, reported Reuters, citing people familiar with the matter.
The restructuring could potentially affect the company’s management of AI risks under the new governance model.
Altman is set to receive equity in the for-profit company, which could be valued at $150 billion post-restructuring. The company is also considering removing the cap on returns for investors.
An OpenAI spokesperson told Reuters, “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 non-profit is core to our mission and will continue to exist.”
The restructuring plan is still being finalized with lawyers and shareholders, and the timeline remains uncertain.
The transition from non-profit control could make OpenAI operate more like a typical startup, a move generally welcomed by its investors.
However, it could also raise concerns from the AI safety community about the lab’s governance in its pursuit of AGI, the report noted.
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Why It Matters: This development comes amid leadership changes at OpenAI, with the company’s CTO Mira Murati announcing her departure and president Greg Brockman currently on sabbatical.
OpenAI was established in 2015 as a non-profit AI research organization. It launched the for-profit OpenAI LP entity in 2019, securing capital from Microsoft Corporation (NASDAQ:MSFT).
Tesla and SpaceX CEO Elon Musk, who co-founded the company and later left it in 2018 over some differences, has repeatedly spoken against OpenAI’s transition.
“Either turning a non-profit into a for-profit is legal and everyone should be doing it or it’s illegal and OpenAI is a house of cards,” he said in August earlier this year.
Previously, it was reported that OpenAI’s next funding round is anticipated to include convertible notes, with a potential valuation of $150 billion. This valuation will hinge on whether the company can restructure and remove the current profit cap for investors.
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