OpenAI's for-profit plan includes a public benefit corporation

Following months of speculation, OpenAI has finally shared how it plans to become a for-profit company. In a blog post penned by its board of directors, OpenAI said Thursday it plans to transform its for-profit arm into a Public Benefit Corporation sometime in 2025. PBCs or B Corps are for-profit organizations that attempt to balance the interests of their stakeholders while making a positive impact on society.

“As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company,” OpenAI said, adding that many of its competitors are registered as PBCs, including Anthropic and even Elon Musk’s own xAI. “[The move] would enable us to raise the necessary capital with conventional terms like others in this space.”

As part of the transformation, OpenAI’s nonprofit division would retain a stake in the for-profit unit in the form of shares “at a fair valuation determined by independent financial advisors,” but would lose direct oversight of the company. “Our plan would result in one of the best resourced non-profits in history,” claims OpenAI.

Following the reorganization, the for-profit division would be responsible for overseeing OpenAI’s “operations and business,” while the nonprofit arm would operate separately with its own leadership team and a focus on charitable efforts in health care, education and science.

OpenAI did not state whether CEO Sam Altman would receive an equity stake as part of the restructuring. Last year, OpenAI’s board of directors briefly fired Altman before bringing him back, in the process sparking the institutional crisis that led to this week’s announcement. According to some estimates, OpenAI’s for-profit arm could be worth as much as $150 billion. In 2019, OpenAI estimated it would need to raise at least $10 billion to build artificial general intelligence. In October, the company secured $6 billion in new funding.

“The hundreds⁠ of billions⁠ of⁠ dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” OpenAI said. “We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness.”

Despite this week’s announcement, OpenAI is likely to face multiple roadblocks in implementing its plan. In addition to its ongoing legal feud with Elon Musk, Meta recently sent a letter to California’s attorney general urging him to stop OpenAI from converting to a for-profit company, saying the move would be “wrong” and “could lead to a proliferation of similar start-up ventures that are notionally charitable until they are potentially profitable.”

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