Unlike other startups, like SpaceX, OpenAI is not a conventional company. Indeed, since 2020, it is made up of a non-profit part, which makes decisions, and a for-profit company which develops and markets products like ChatGPT. It is also this for-profit part that raises funds, to finance the development of new OpenAI technologies. Investors do not have decision-making power, but receive returns on their investment. And these returns on investment are capped, so that OpenAI is not only focused on commercial interests, but also on research.
Although atypical, this structure allowed the creator of ChatGPT to raise billions of dollars and reach a valuation of more than $157 billion. But OpenAI needs to raise even more funds to finance its research. And in a publication on its website, it announces that the board of directors is in the process of evaluating a new structure. “The hundreds of billions of dollars that major companies are investing in AI development today shows what it will really take for OpenAI to continue pursuing its mission. Once again, we need to raise more capital than we imagined. Investors want to support us, but, at this level of capital, they need conventional equity and less structural importance”we read in the publication.
In other words, the new structure should allow OpenAI to attract more investments, by eliminating certain restrictions that currently apply to investors.
OpenAI will create a “PBC”
OpenAI’s plan is to transform its for-profit bank into a Public Benefit Corporation registered in Delaware. It is a form of American business that allows for profit while taking into account the public interest. OpenAI’s PBC will have common stock, which should appeal to investors, and OpenAI’s original mission will be its public benefit mission.
The non-profit arm will not disappear, since it will own shares in the new company. Its participation will be determined following a “fair assessment determined by independent financial advisors”. In essence, this is a sort of rebalancing between OpenAI’s mission (to develop artificial general intelligence that benefits all of humanity) and the interests of investors.
In any case, this new structure should allow OpenAI to attract new investments, which will allow it to purchase more computing power to improve its artificial intelligence models.
- OpenAI says it needs more capital than it thought to accomplish its mission
- To attract more investments, the creator of ChatGPT plans to change its structure
- On its website, it describes a new organization, currently being evaluated, which would be more interesting for investors
