OpenAI is making a plan to shift to a new for-profit structure

(Reuters) – OpenAI on Friday laid out a plan to revamp its corporate structure next year, saying it will create a public benefit corporation to manage its growing business and ease restrictions imposed by its current non-profit parent.

Under the proposed structure, a public benefit corporation (PBC) would manage and monitor OpenAI’s operations and business, while the nonprofit would hire a leadership team and staff for charitable initiatives in sectors such as healthcare, education, and science.

OpenAI, among the world’s most valuable startups, began in 2015 as a research-focused nonprofit, but has since looked to make structural changes to attract more investment to fund its expensive pursuit of artificial general intelligence (AGI), or AI that… Beyond human intelligence.

The latest $6.6 billion funding round at a $157 billion valuation hinged on whether the ChatGPT maker could flip its company structure and remove the profit cap for investors.

“We once again need to raise more capital than we could have imagined,” the Microsoft-backed startup said in a blog post. “Investors want to back us, but with this amount of capital, they need traditional equity and less structural allocation.”

She said OpenAI plans to convert its current for-profit arm into a public benefit corporation, incorporated in Delaware. OpenAI’s non-profit arm will acquire shares in the People’s Bank of China at a fair valuation determined by independent financial advisors.

Its competitors like Anthropic and Elon Musk’s XAI use a similar structure.

“(The structure) will enable us to raise the necessary capital on traditional terms like others in this space,” OpenAI said.

(Reporting by Arshiya Bajwa in Bengaluru; Editing by Anil D’Silva)