OpenAI’s for-profit plan includes a public benefit corporation

Afterwards months of speculationOpenAI has finally shared how it plans to become a for-profit company. In a blog post Penned 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 stakeholders while making a positive. impact on society.

“When we enter 2025, we must become more than a laboratory and a startup – we must become a sustainable company,” OpenAI said, adding that many of its competitors are registered as PBCs, including Anthropogenic and even Elon Musk’s own xAI. “(The move) would allow us to raise the necessary capital with conventional terms like others in this space.”

As part of the transformation, OpenAI’s non-profit division will retain a stake in the for-profit unit in the form of shares “at a fair valuation determined by independent financial advisors,” but will lose direct oversight of the company. “Our plan is going to be one of the best non-profit resources in history,” says OpenAI.

After 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 a focus on charitable efforts in health care, education and science.

OpenAI did not say whether CEO Sam Altman would receive an equity stake as part of the restructuring. Last year, the board of directors of OpenAI briefly fired Altman before returning it, in the process of spreading the institutional crisis that led to this week’s announcement. According to some estimatesOpenAI’s for-profit arm could be worth as much as $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 insured $6 billion in new funding.

“The hundreds of billions of dollars that large companies are now investing in AI development show what it really takes for OpenAI to continue following the mission,” OpenAI said. “We again need to raise more capital than we imagined. Investors want to support us, but, at this scale of capital, they need conventional equity and less structural customization.”

Despite this week’s announcement, OpenAI is likely to face several obstacles in implementing its plan. In addition to his ongoing legal dispute with Elon Musk, Meta recently sent a letter to California’s attorney general who urged him to prevent OpenAI from becoming a for-profit company, saying the move would be “wrong” and “could lead to a proliferation of similar initiatives that are notionally charitable until they are potentially profitable”.

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