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OpenAI is in discussions about changing its corporate structure to become more investor-friendly, as it pushes ahead with a multibillion-dollar fundraise and seeks to retain its lead over Google and other rivals.
The artificial intelligence start-up has spoken to investors about restructuring itself, according to three people involved in those conversations. Although a final form has not been agreed, it would likely be more attractive to financial backers by seeking to simplify the company’s current complex non-profit structure, they added.
The discussions come as OpenAI is in talks to raise new capital at a valuation of more than $100bn, according to multiple people familiar with the deal, in a fundraising round that is expected to be led by venture capital firm Thrive Capital. Apple and Nvidia are in talks to participate in the round for the first time alongside existing OpenAI partner Microsoft, according to two of the people.
If successful, the round would make OpenAI one of the most valuable technology start-ups in Silicon Valley history, surpassing the $95bn valuation achieved by payments company Stripe in a 2021 private fundraising. It would also give the start-up the financial backing of the three most valuable tech companies in the world.
“We remain focused on building AI that benefits everyone and as we’ve previously shared we’re working with our board to ensure that we’re best positioned to succeed in our mission,” OpenAI said in a statement. “The non-profit is core to our mission and will continue to exist.”
Nvidia, Apple, Microsoft and Thrive declined to comment.
OpenAI currently has a unique corporate structure. Investors are issued equity by OpenAI’s for-profit subsidiary, which is governed by its non-profit board. The board’s “principal beneficiary is humanity, not OpenAI investors,” according to the company.
Earlier this month, OpenAI was sued by its co-founder and tech billionaire Elon Musk, who claims that it backtracked on its mission to benefit humanity when it signed a commercial partnership with Microsoft. This week, Musk posted on X that “either turning a non-profit into a for-profit is legal and everyone should be doing it, or it’s illegal and OpenAI is a house of cards.”
There has not yet been a final decision on whether to change OpenAI’s structure, but one option under consideration would be removing an existing cap on profits for investors in the for-profit subsidiary.
OpenAI rival Anthropic has a traditional benefit corporation structure in order “to appropriately balance the public benefit with stockholder interests”.
OpenAI’s current structure was designed to ensure it remained aligned to its mission of benefiting humanity with super-powerful AI models, while enabling it to garner the considerable financial resources required to do so. However, the company’s unusually complex set-up came under scrutiny last November during an attempted coup against chief executive and co-founder Sam Altman.
Directors of the non-profit board that ultimately controls the company ousted Altman, but he returned days later following pressure from employees and investors in OpenAI’s for-profit subsidiary.
Investors are currently required to sign up to an operating agreement that states: “It would be wise to view any investment in [OpenAI’s for-profit subsidiary] in the spirit of a donation” and that OpenAI “may never make a profit”.
That has not been an impediment to fundraising in the past. OpenAI has received $13bn from Microsoft alone since launching the for-profit subsidiary in 2019.
But shifting to a simpler for-profit structure would be welcomed by the start-up’s financial partners, according to one investor in OpenAI. “All preferred investors have a profit cap, there’s a lot of talk about making it a more traditional investment so we’re not capped on our upside,” the person said.
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