OpenAI reveals new details about its plan to convert to a for-profit structure: 'We have to become an enduring company'
Jason Redmond/AFP/Getty Images
- OpenAI shared new details about its plan to overhaul its company structure.
- Its current for-profit arm has been governed by a nonprofit board.
- OpenAI said its existing for-profit arm would become a public benefit corporation with ordinary shares of stock.
OpenAI has detailed its plans for a new corporate structure that would separate its business from being controlled by its nonprofit board.
In a blog post shared by the company on social media on Friday, the company said its board was considering "how to best structure OpenAI to advance the mission of ensuring AGI benefits all of humanity have been."
"Our plan is to transform our existing for-profit into a Delaware Public Benefit Corporation (PBC) with ordinary shares of stock and the OpenAI mission as its public benefit interest," OpenAI wrote.
"The PBC is a structure used by many others that requires the company to balance shareholder interests, stakeholder interests, and a public benefit interest in its decisionmaking," the company said. "It will enable us to raise the necessary capital with conventional terms like others in this space."
This structure aims to generate profit while also benefiting the public interest. The nonprofit arm would take shares in the public benefit corporation, it added.
OpenAI said it was planning to make the structural change "in order to best support the mission of ensuring artificial general intelligence benefits all of humanity."
"As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company," it added.
In September, OpenAI confirmed that it would convert to a for-profit structure.
The move was also widely reported to be key to its $6.6-billion funding round in October: OpenAI has two years to make the switch, or else investors in the round could ask for their money back, multiple reports said.
OpenAI CEO Sam Altman said last month that a for-profit status makes it easier to attract new funding.
Altman is overseeing the transition just over a year after OpenAI's board temporarily removed him as the company's chief executive, thrusting its nonprofit governance into the spotlight.
While Altman was ousted for a few days, he returned as CEO, and many of the company leaders who pushed him out have since left their roles and new board members were added.
Now, OpenAI said the AI race has proven more costly than anticipated, which requires a structure more amenable to investors.
"The hundreds of billions of dollars that major companies are now investing into AI show what it will really take for OpenAI to continue pursuing the mission," OpenAI wrote in its latest blog post.
"We once again need to raise more capital than we'd imagined," it said. "Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness."