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openai reportedly considering changing company structure or removing profit cap for investors

2024-08-31

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① according to reports, openai is considering changing its corporate structure to make it more investor-friendly; ② earlier, there were reports that openai was negotiating a new round of financing and planned to raise billions of dollars at a valuation of more than $100 billion; ③ openai has not yet made a final decision, and one of the options is to remove the profit cap for existing investors in its for-profit subsidiaries.

cailianshe news, august 31 (editor: xia junxiong)artificial intelligence (ai) research company openai is considering changing its corporate structure to make it more investor-friendly as it pushes forward with a multi-billion dollar funding round, according to media reports citing sources.

earlier media reports said that openai is negotiating a new round of financing, planning to raise billions of dollars at a valuation of more than $100 billion.venture capital firm thrive capital will lead this round of financing, with an investment of $1 billion. in addition, apple, nvidia and microsoft, openai's largest shareholder, are also interested in participating in this round of financing.

openai has discussed the reorganization with investors but has not yet agreed on a final form, according to people familiar with the matter. simplifying openai's current complex nonprofit structure would make the company more attractive to financial investors.

if the new round of financing is successfully completed, openai will become one of the most valuable technology startups in silicon valley history, exceeding the $95 billion valuation achieved by payment company stripe in private financing in 2021.

openai was founded as a nonprofit organization and became a for-profit startup in 2019. openai currently defines itself as a capped-profit company.

openai may remove profit cap for investors

in fact,openai ceo sam altman has also publicly complained about the company's complex structure.

last june, in response to the question of whether openai would go public, altman replied: "i don't want to be sued by the public markets and wall street, etc., so, (the answer is) no, not that interested." he later explained: "we have a very strange structure, we have a profit cap."

it is reported that openai has not yet made a final decision on whether to change its structure.one option would be to remove the profit cap on existing investors in its for-profit subsidiaries.

openai currently offers shares to investors through its for-profit subsidiary, which is governed by its nonprofit board of directors, which openai says is primarily for humanity as a whole, not openai’s investors.

currently, investors need to sign an operating agreement when investing in openai, which stipulates that any investment in openai's for-profit subsidiaries should be in the spirit of a donation and that openai may never make a profit.

the above regulations have not been an obstacle so far, and openai has received $13 billion in investment from microsoft alone.

however, according to one openai investor, they hope openai can move to a more traditional, simpler for-profit structure, preferably by removing the profit cap.