After months of speculation, OpenAI has finally shared plans on how it plans to become a for-profit company. In a blog post written by the company’s board of directors, OpenAI said on Thursday that it plans to transform its for-profit part into a public benefit corporation sometime in 2025. PBCs or B Corps are for-profit organizations that try to balance the interests of their stakeholders while making a positive impact on society.
“In 2025, we will have to become more than a lab and a startup – we must become a sustainable company,” OpenAI said, adding that many of their competitors are registered as PBCs, including Anthropic and even Elon Musk’s own xAI. “[This step] will allow us to raise the necessary capital on normal terms, as other companies in the sector do.”
As part of the transformation, OpenAI’s nonprofit arm will retain an equity stake in the for-profit arm “at a fair valuation determined by independent financial advisors” but will lose direct oversight of the company. “Our plan will create one of the most well-resourced nonprofit organizations in history,” OpenAI says.
After the reorganization, the for-profit division will be responsible for overseeing the “operations and business” of OpenAI, while the nonprofit division will operate separately with its own management team and focus on philanthropy in health, education, and science.
OpenAI did not say whether CEO Sam Altman would receive an equity stake as part of the restructuring. Last year, OpenAI’s board of directors briefly fired Altman and then brought him back, triggering an institutional crisis that led to this week’s announcement. According to some estimates, OpenAI’s commercial division could be worth up to $150 billion. In 2019, OpenAI estimated that it needed to raise at least $10 billion to create artificial general intelligence. In October, the company received $6 billion in new funding.
“The hundreds of billions of dollars that large companies are now investing in AI development shows what it really takes for OpenAI to continue to fulfill its mission,” OpenAI said. “Once again, we need to raise more capital than we ever imagined. Investors want to support us, but with this scale of capital, they need common equity and less structural closure.”
Despite this week’s announcement, OpenAI is likely to face numerous obstacles in implementing its plan. In addition to its ongoing legal battle with Elon Musk, Meta recently sent a letter to the California attorney general calling for a halt to OpenAI’s conversion to a for-profit company, saying the move would be “wrong” and “could lead to a proliferation of similar startups that are notionally charitable until they become potentially profitable.”
