The restructuring follows OpenAI’s recent $6.6 billion funding round, which boosted its valuation to $157 billion
OpenAI is making significant changes to its corporate structure in response to the growing demand for computational resources to support next-gen AI models. The company has announced plans to transition its for-profit arm into a public benefit corporation (PBC), a move intended to facilitate large-scale investments that have been constrained by its current setup. This shift comes amid mounting competition in the AI space, with rivals like Anthropic, Meta, and Google rapidly advancing their own models.
The new structure will see OpenAI’s Delaware-based PBC take control of its business and operations, while its non-profit arm will focus on charitable initiatives, including those in healthcare, education, and science. This marks a departure from OpenAI’s original non-profit model, which has evolved since the company’s founding in 2015.
Initially, OpenAI focused on key ideas from top researchers and less on the massive computational power needed for development. However, by 2019, the company recognized that achieving its mission would require far more capital and compute power than donations could provide. As a result, it established a hybrid structure, with the non-profit controlling the for-profit business, allowing the company to raise significant investment, such as Microsoft’s $1 billion funding.
Five years later, OpenAI finds itself in a highly competitive AI landscape, where the investments necessary for continued growth are in the hundreds of billions. To keep up, OpenAI needs to raise capital through more conventional equity investments, which is difficult under its current structure. In response, the company is planning a shift in 2025, where the for-profit entity will gain full control over operations, while the non-profit will retain a “significant interest” in the company, with shares determined by independent advisors.
The restructuring follows OpenAI’s recent $6.6 billion funding round, which boosted its valuation to $157 billion. However, the move has attracted criticism, notably from Elon Musk, who has challenged OpenAI’s structure and filed legal actions against its transition to a for-profit model.
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