After months of speculation, OpenAI finally shared how it plans to become a for-profit company. in a blog post Written by its board of directors, OpenAI said Thursday that it plans to transform its for-profit arm into a Public Benefit Corporation sometime in 2025. PBCs or B Corps are for-profit organizations that attempt to balance the interests of their parties interested and at the same time generate a positive impact. impact on society.
“As we enter 2025, we will have to become more than just a lab and a startup: we have to become an enduring company,” OpenAI said, adding that many of its competitors are registered as PBCs, including anthropic and even Elon Musk's own xAI. “(The move) would allow us to raise the necessary capital on conventional terms like others in this space.”
As part of the transformation, OpenAI's nonprofit division would maintain a stake in the for-profit unit in the form of shares “at a fair valuation determined by independent financial advisors” but would lose direct oversight of the company. “Our plan would result in one of the most well-resourced nonprofits in history,” OpenAI says.
Following the reorganization, the for-profit division would be responsible for overseeing OpenAI's “operations and business,” while the nonprofit arm would operate separately with its own leadership team and focus on charitable efforts in healthcare, education and science.
OpenAI did not indicate whether CEO Sam Altman would receive an equity stake as part of the restructuring. Last year, OpenAI's board briefly fired Altman before bringing him back, setting off the institutional crisis that led to this week's announcement. According <a target="_blank" data-i13n="cpos:6;pos:1" href="https://www.reuters.com/technology/artificial-intelligence/openais-stunning-150-billion-valuation-hinges-upending-corporate-structure-2024-09-14/” rel=”nofollow noopener” target=”_blank” data-ylk=”slk:some estimates;cpos:6;pos:1;elm:context_link;itc:0;sec:content-canvas” class=”link “>some estimatesOpenAI's for-profit arm could be worth up to $150 billion. In 2019, OpenAI estimated that it would need to raise at least $10 billion to build artificial general intelligence. In October, the company raised $6 billion in new financing.
“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. “Once again we need to raise more capital than we had imagined. Investors want to back us but, at this scale of capital, they need conventional capital and less structural customization.”
Despite this week's announcement, OpenAI is likely to face multiple obstacles in implementing its plan. In addition to its ongoing legal dispute with Elon Musk, Meta recently sent a letter to California's attorney general urging him to block OpenAI from becoming a for-profit company, saying the move would be “wrong” and “could lead to a proliferation of similar start-ups that are theoretically charitable until they are potentially profitable.”
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