OpenAI is exploring changes to its corporate structure to make it more attractive to investors as it advances with a multibillion-dollar fundraising effort and aims to maintain its competitive edge over Google and other rivals.
The AI startup has been in discussions with investors about a potential restructuring, according to sources involved in the talks. While a final plan has not been settled, the changes would likely simplify the company’s complex non-profit framework to appeal more to financial backers.
These discussions are taking place as OpenAI seeks to raise new capital at a valuation exceeding $100 billion, with venture capital firm Thrive Capital expected to lead the round. Apple and Nvidia are also in talks to join the funding round for the first time, alongside existing partner Microsoft.
If successful, this fundraising round could make OpenAI one of the highest-valued technology startups in Silicon Valley, surpassing the $95 billion valuation achieved by Stripe in 2021. It would also align OpenAI with three of the most valuable tech companies globally.
“We remain focused on building AI that benefits everyone and are working with our board to ensure we are well-positioned to succeed in our mission,” OpenAI stated. “The non-profit remains central to our mission and will continue to exist.”
Nvidia, Apple, Microsoft, and Thrive declined to comment.
OpenAI’s current structure is distinctive, with investors holding equity in its for-profit subsidiary, which is overseen by a non-profit board. The board’s primary beneficiary is humanity rather than OpenAI’s investors.
Earlier this month, OpenAI faced a lawsuit from co-founder Elon Musk, who alleges the company deviated from its mission to benefit humanity by entering a commercial partnership with Microsoft. Musk recently commented on X that converting a non-profit into a for-profit entity is either legal and should be widely adopted, or illegal and indicative of a flawed foundation at OpenAI.
A final decision on whether to alter OpenAI’s structure has not yet been made, but one option under consideration involves removing the existing profit cap for investors in the for-profit subsidiary.
In contrast, OpenAI competitor Anthropic operates as a benefit corporation to “appropriately balance the public benefit with stockholder interests.”
OpenAI’s current structure was designed to align with its mission of benefiting humanity through advanced AI models while attracting substantial financial resources. However, the complexity of this setup faced scrutiny last November during a failed attempt to remove CEO and co-founder Sam Altman.
The non-profit board, which controls the company, initially ousted Altman, but he returned days later due to pressure from employees and investors in OpenAI’s for-profit subsidiary.
Investors are currently required to agree to terms stating that investments in OpenAI’s for-profit subsidiary should be viewed “in the spirit of a donation” and that the company “may never make a profit.”
Despite this, OpenAI has successfully raised $13 billion from Microsoft since launching the for-profit subsidiary in 2019.
Shifting to a simpler for-profit structure is seen as a positive move by some investors. “All preferred investors have a profit cap. There’s significant discussion about adopting a more traditional investment model to remove the cap on our potential returns,” noted one investor.