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(Reuters) – OpenAI unveiled a plan on Friday to overhaul its corporate structure next year, saying it would create a nonprofit corporation to manage its growing business and ease restrictions imposed by its current nonprofit parent.
Under the proposed structure, the Public Benefit Corporation (PBC) will manage and control OpenAI’s operations and business, while the nonprofit organization will hire a leadership team and staff for charitable initiatives in sectors such as healthcare, education and science.
OpenAI, one of the world’s most valuable startups, started as a research-focused nonprofit in 2015 but has since been trying to make structural changes to attract more and more investment to fund its costly pursuit of artificial general intelligence (AGI), or AI that surpasses human ones Intelligence.
Its latest $6.6 billion funding round at a $157 billion valuation hinged on whether the ChatGPT maker can shake up its corporate structure and remove a profit cap for investors.
“We once again have to raise more capital than we imagined. Investors want to support us, but with this capital size we need conventional equity and less structural benchmarks,” the Microsoft-backed startup said in a blog post.
OpenAI plans to convert its existing for-profit arm into a nonprofit corporation based in Delaware, it said. OpenAI’s charitable arm would acquire shares in PBC at a fair value determined by independent financial advisors.
Its competitors such as Anthropic and xAI owned by Elon Musk use a similar structure.
“(The structure) will allow us to raise the necessary capital on traditional terms like others in this space,” OpenAI said.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D’Silva)
