OpenAI announces structural changes to facilitate funding for its AI

OpenAI, the company behind ChatGPT, revealed last Friday its plans to reform its corporate structure, transforming its for-profit arm into a public benefit corporation (PBC) in Delaware, United States. According to the company, this change would allow for greater investment by removing the limitations imposed by its non-profit parent. Additionally, the measure would help OpenAI secure funds in a context where the development of high-capacity artificial intelligences requires multimillion-dollar investments.

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The reorganization addresses the financial challenges of achieving a general artificial intelligence (AGI) that surpasses human intelligence. In October, the company raised 6.6 billion dollars in its latest funding round and was valued at 157 billion, depending, of course, on this restructuring and removing the profit cap for investors in two years. However, OpenAI assured that the non-profit entity will retain a “significant interest” in the new PBC through shares, making it one of the best-funded non-profit organizations in the world.

The decision has not been without controversy. Elon Musk, co-founder of OpenAI and now one of its main critics, has attempted to block the plan, claiming it prioritizes profits over the public good. Musk even sued the company, stating it violated contractual agreements. Additionally, Meta asked the California attorney general to stop the transformation to PBC. However, OpenAI maintains that the changes are necessary to continue developing its mission.

Although becoming a PBC involves balancing social objectives with profit generation, some experts like Ann Lipton, a corporate law professor, warn that this structure does not guarantee the fulfillment of its mission. “In practice, it is the majority shareholders who decide how faithful a public benefit corporation is to its mission,” she explained.

Analysts consider this change essential to compete with rivals like Anthropic and xAI, which recently raised billions in funding. “This is the critical step for OpenAI to continue attracting capital,” noted Gil Luria, an analyst at DA Davidson & Co, although he added that the move “does not necessarily imply that OpenAI will go public”.

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