OpenAI’s journey began in 2015 as a non-profit organisation, funded by donations that totalled around $130.5 million. OpenAI is expected to raise a new round of financing through convertible notes, with its valuation potentially reaching $150 billion
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OpenAI is expected to make significant changes to its corporate structure in preparation ahead of its Initial Public Offering (IPO) next year. It was reportedly revealed by CEO Sam Altman during a weekly staff meeting that the company plans to move away from its current non-profit control, shifting towards a more traditional for-profit model.
While the specifics of how this transformation will be carried out were not discussed in detail, it has been stated that the company will continue to maintain its core mission of developing artificial intelligence (AI) that benefits everyone, with the non-profit aspect of its organisation still playing a key role.
One of the main reasons behind this structural shift is the upcoming IPO. OpenAI is expected to raise a new round of financing through convertible notes, with its valuation potentially reaching $150 billion. However, this is dependent on the company’s ability to change its current corporate framework and remove the profit cap placed on its investors.
This profit cap has previously limited how much investors, such as Microsoft, can earn from their investment. The changes are aimed at encouraging further investment, as OpenAI continues its pursuit of developing advanced AI, particularly artificial general intelligence (AGI), which seeks to surpass human intelligence.
OpenAI’s journey began in 2015 as a non-profit organisation, funded by donations that totalled around $130.5 million. However, it soon became evident that these donations alone would not suffice to meet the rising costs associated with the required computational power and talent.
To address this, the company created a for-profit subsidiary, while its non-profit entity retained control over the for-profit arm. This complex structure has allowed OpenAI to raise significant investments from companies like Microsoft, while maintaining a cap on the profits that can be distributed to investors. Any profits beyond this cap are redirected to its non-profit division.
In recent years, OpenAI’s revenue has experienced strong growth, with reports suggesting that it doubled its annualised revenue in the first half of the year, driven by the success of its subscription-based ChatGPT. Despite the challenges posed by its intricate corporate structure, including a brief leadership crisis in 2023, OpenAI appears poised to attract even more investment as it prepares for its IPO and continues its AI advancements.