Written by Tristan Greeneformer writerReviewed by Bryan O'Sheastaff editorOpenAI to expand ‘capped for-profit’ status to woo whale investors: Report
The change comes amid reports the firm plans to hold an investment round at a valuation of more than $100 billion.
OpenAI is reportedly considering altering its corporate structure to be more investor-friendly. The company is planning another funding round at a valuation of more than $100 billion.
According to a report from the Financial Times, the artificial intelligence firm is discussing altering its current “capped for-profit” structure both internally and with potential investors.
The unnamed sources claim that these talks center around OpenAI removing caps in order to allow investors access to full profits earned against their shares. This move comes as the company is reportedly planning another funding round with an expected valuation in excess of $100 billion.
Whale investors
The reported funding round would be led by Thrive Capital, which would invest about $1 billion. Microsoft, Apple and Nvidia are also potential investors.
Microsoft currently owns a minority stake in the company, but it’s unclear how a new valuation and the entrance of other tech whales such as Nvidia and Apple would change the calculus.
Capped for-profit
Under the status quo, OpenAI operates as both a nonprofit organization and a capped for-profit company. According to OpenAI, the board of directors oversees both operations with the primary goal of maintaining the nonprofit’s mission.
Investors such as Microsoft, which have invested in the capped for-profit side of the enterprise, can only earn a certain yield on any profits generated by OpenAI’s company side due to the capped nature of its structure.
Removing these caps allows OpenAI to incentivize investors with payouts limited only by the company’s ability to generate profits.
It’s unclear at this time how this move will affect the company’s nonprofit division or whether board members will be capable of simultaneously assuring investors and stakeholders that it can generate profits without sacrificing its professed mission to prioritize service to humanity over generating profits.
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