Fresh off its internal coup and reinstatement of CEO Sam Altman, OpenAI is reportedly in discussion for its next found of funding. The company is reportedly valued at $100B, which is second to only SpaceX in current U.S. startup valuations.
OpenAI was formed on December 11, 2015 as a nonprofit. In 2019, it set up a for-profit subsidiary in a complex arrangement supposedly capping the profit to be made from the sub. This change in corporate structure was reportedly devised to help OpenAI raise capital, in part to compete in the hiring of AI engineers to compete with the likes of Google.
Here’s how OpenAI described its structure:
- The for-profit would be legally bound to pursue the Nonprofit’s mission, and carry out that mission by engaging in research, development, commercialization and other core operations. Throughout, OpenAI’s guiding principles of safety and broad benefit would be central to its approach.
- The for-profit’s equity structure would have caps that limit the maximum financial returns to investors and employees to incentivize them to research, develop, and deploy AGI in a way that balances commerciality with safety and sustainability, rather than focusing on pure profit-maximization.
- The Nonprofit would govern and oversee all such activities through its board in addition to its own operations. It would also continue to undertake a wide range of charitable initiatives, such as sponsoring a comprehensive basic income study, supporting economic impact research, and experimenting with education-centered programs like OpenAI Scholars. Over the years, the Nonprofit also supported a number of other public charities focused on technology, economic impact and justice, including the Stanford University Artificial Intelligence Index Fund, Black Girls Code, and the ACLU Foundation.
It’s unclear whether OpenAI can remain true to its nonprofit mission, as its for-profit subsidiary becomes bigger and bigger. The recent fiasco over the Board’s attempted ouster of Sam Altman seems to suggest the ascendance of the business side of OpenAI.