The news was doing the rounds in the technology world for some time, but nothing could be said for sure. This time, however, it is going to be proven true. Yes, ChatGPT founder OpenAI is going from ‘non-profit’ to ‘profit’. In addition, co-founder and CEO Sam Altman will receive a certain number of shares of the company.
It was heard since the beginning of this month that OpenAI is going to raise 6.5 billion dollars of investment, where the company’s market value will be estimated at 100 million dollars as the world’s first startup. Shortly thereafter, the market cap rose to $150 million in a pre-leverage round. Even at such a high price there was no shortage of investors. In addition to existing investors like venture capital firms Thrive Capital and Microsoft, tech giants like Nvidia and Apple were also ready to invest large sums of money. But investment is hindered by OpenAI’s ‘non-profit’ corporate structure.
And it has been heard for quite some time that OpenAI is going to change their core business from ‘non-profitable’ to ‘profitable’ in this hurdle. This time that is going to be true, a source related to the matter told the news agency Reuters.
Reportedly, OpenAI’s corporate structure will undergo an internal restructuring process. According to the plan, the core business of the organization is going to become a ‘profit’ structure – as a result, the non-profit board (non-profit board) will no longer have control over their core business. It goes without saying that this initiative of OpenAI is to attract investors.
However, although the core business is ‘profitable’, OpenAI’s non-profit (non-profit) existence is not disappearing, the source said. This change in governance structure will also impact the various steps taken by the organization to address AI-related risks.
An OpenAI spokesperson said, “We remain focused on building AI that works for everyone. We continue to work with the Board to put ourselves in the best position to succeed at Ipsiit’s goals. The not-for-profit structure is at the very core of our mission and will continue to exist.”
Co-founder and Chief Executive Officer (CEO) Sam Altman is also set to benefit from the transition to a ‘profitable’ corporate structure. Altman is going to get shares of the company for the first time, but it is not possible to confirm how many shares he will get. Several sources said so on condition of anonymity. Because after the restructuring of the structure, there is no more ‘profit cap’ or profit limitation applicable to investors.
OpenAI’s restructuring plan is being discussed in detail with lawyers and board members. However, sources could not confirm when this planned restructuring process will be completed. The decision to restructure is seen as significant for the future direction of OpenAI in the wake of the recent exit of several senior executives such as Chief Technology Officer (CTO) Meera Murati. Note that the company’s president, Greg Brockman, is currently on vacation.
OpenAI debuted in 2015 as a non-profit AI research institute. Then in 2019, a for-profit subsidiary named ‘OpenAI LP’ joined the not-for-profit parent OpenAI. The main reason behind setting up profitable subsidiaries was to raise investment to advance their AI research activities.
It should be noted that in 2019, Microsoft invested a large amount of money in OpenI LP and Microsoft is also the biggest investor of the company at the moment. OpenAI made waves in the tech world in November 2022 with the introduction of generative AI-based chatbot ChatGPT. ChatGPT is currently the most popular chatbot in the world with 20 million users per week.
As the popularity of ChatGPT has increased, so has the market value of OpenAI. The company’s market value has reached $150 billion from $14 billion in 2021.
