OpenAI Board Considering Transforming For-Profit Into Delaware Public Benefit Corporation

OpenAI’s board of directors plans to transform the organization’s for-profit arm into a Delaware Public Benefit Corporation (PBC) in order to raise the capital it needs to continue developing artificial general intelligence (AGI).

The organization will continue to have a structure that includes both a non-profit and a for-profit, as it does now, but it is evolving that structure in order to strengthen both arms, OpenAI said in a Thursday (Dec. 26) blog post outlining the change its board is considering.

“Eventually it became clear that the most advanced AI would continuously use more and more compute and that scaling large language models was a promising path to AGI rooted in an understanding of humanity,” the post said. “We would need far more compute, and therefore far more capital, than we could obtain with donations in order to pursue our mission.”

As it considers how to structure OpenAI, the board said it aims to transform the for-profit into a PBC with ordinary shares of stock and OpenAI’s mission as its public benefit interest, saying this structure would be best for the mission’s long-term success.

Under the plan being considered, the non-profit’s interest in the for-profit would become shares in the PBC, with the valuation being determined by independent financial advisors; the PBC would run and control OpenAI’s operations and business; and the non-profit would hire leaders and staff and focus on charitable initiatives, per the post.

“The PBC is a structure used by many others that requires the company to balance shareholder interests, stakeholder interests, and a public benefit interest in its decisionmaking,” the post said. “It will enable us to raise the necessary capital with conventional terms like others in this space.”

It was reported Thursday (Dec. 26) that OpenAI and its largest investor, Microsoft, have been in talks since October about how to restructure the AI firm.

In September, it was reported that OpenAI planned to restructure its core business into a for-profit benefit corporation, with the OpenAI non-profit owning a minority stake.

The restructuring would make the company more attractive to investors, as it would operate more like a typical startup, the report said.

The post OpenAI Board Considering Transforming For-Profit Into Delaware Public Benefit Corporation appeared first on PYMNTS.com.