In Brief
- OpenAI transitions into a for-profit public benefit corporation to raise new capital.
- Microsoft secures a 27% stake valued at $135B and retains AI model access until 2032.
- OpenAI Foundation keeps 26% control to uphold the company’s mission on responsible AGI.
OpenAI has officially transitioned into a public benefit corporation, finalising its shift from a capped-profit structure to a more conventional for-profit model. This move clears the path for the company to raise substantial capital and potentially pursue an initial public offering (IPO) in the coming years.
The restructuring was approved by the attorneys general of California and Delaware, ending more than 18 months of internal planning. OpenAI will now operate through a new entity called OpenAI Group. This change allows traditional equity stakes and removes earlier constraints on investment returns that were tied to the nonprofit model.
As part of the shift, Microsoft acquired a 27% stake in OpenAI, valued at $135 billion. In return, Microsoft gains access to OpenAI’s models until 2032 but gives up exclusive rights to provide cloud infrastructure. The company also relinquished its veto rights over acquisitions and securities issuance, simplifying OpenAI’s future dealmaking.
Board Control, Governance, and Future Outlook
Despite becoming a for-profit entity, OpenAI retains strong nonprofit oversight through the OpenAI Foundation, which will hold 26% of the new business and maintain exclusive rights to hire or remove board members. This setup ensures that OpenAI’s original mission to develop artificial general intelligence (AGI) for the benefit of humanity remains intact.
Sam Altman, CEO of OpenAI, remains on the board but has chosen not to take any equity in the restructured entity. Investors like SoftBank, Sequoia Capital, Thrive Capital, and Andreessen Horowitz can now hold equity, potentially benefitting from a future IPO.
OpenAI is currently valued at $500 billion and continues to expand product offerings like the ChatGPT Atlas browser and Sora, a video generation tool. The company plans to establish a panel to verify any future AGI milestones.
The announcement also boosted Microsoft’s market capitalisation beyond $4 trillion. As investor interest intensifies, OpenAI’s new structure positions it as a major contender in the next phase of AI development, balancing mission integrity with capital market access.
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Source: https://coincu.com/news/openai-finalizes-for-profit-shift/