ChatGept-maker OpenAI on Friday planned a new corporate structure away from the control of a nonprofit — a point of contention for the artificial intelligence trailblazer.
OpenAI was founded as a non-profit in 2015 and has since transformed into a “capped” for-profit enterprise that allows money to be made on a limited scale.
But it is trying to become a profit-making Public Benefit Corporation (PBC), which can attract more investments.
In a blog post, the company said it plans to restructure as a PBC, which “requires the company to balance shareholder interests, stakeholder interests, and public benefit interest in its decision making.”
“This will enable us to raise the capital we need with traditional terms like others in the sector,” OpenAI said.
It said it needed to raise more capital than imagined, citing the hundreds and billions of dollars that major companies are now pouring into artificial intelligence development.
“Investors want to support us, but at this scale of capital, traditional equity and less structural specificity is required,” OpenAI said.
Currently, its structure does not allow the Board to directly consider the interests of those who will finance its mission.
“This structure does not enable nonprofits to easily do anything more than take control for profit,” the company said.
With the restructuring, PBC will control the operations and business of OpenAI.
Its non-profit arm will create a team to pursue charitable initiatives in areas such as health care.
OpenAI is under high scrutiny as an artificial intelligence powerhouse, reaching a staggering valuation of $157 billion in recent days.
The company, led by Sam Altman, has become one of the most successful startups in Silicon Valley history – making headlines in 2022 when it released its generative AI chatbot ChatGPT.
But its corporate set-up collapsed in late 2023 when the board abruptly fired Altman. The employees revolted and Altman was eventually reinstated, while those involved in ousting him left the company.
Concerned about the situation, new investors have demanded that OpenAI become a more classic profit-making organization within two years.
Its restructuring efforts will likely face hurdles, with Elon Musk reportedly asking a US court to block OpenAI from converting into a profitable venture.
