CashGPT? OpenAI in talks to shift from nonprofit to for-profit structure

Company News

by Adrian Tan

OpenAI, the artificial intelligence company behind ChatGPT, is reportedly in early discussions with regulators in California and Delaware to transition from a nonprofit to a for-profit structure. The shift, if it proceeds, would mark a significant governance change for the $157bn company — founded in 2015 with a mission to advance safe and beneficial AI.

According to sources cited by Bloomberg, OpenAI has begun conversations with the California Attorney General’s office and regulators in Delaware. These discussions involve navigating complex legal requirements, including how to value OpenAI’s core assets, which consist largely of proprietary intellectual property. California law requires that nonprofit assets be directed toward charitable purposes if a company changes its structure — a potential challenge given that OpenAI’s primary assets are proprietary technologies like ChatGPT.

The restructuring aims to make OpenAI more attractive to investors, a direction the company has explored since at least September. 

OpenAI’s recent funding activities underscore the urgency of these talks. In October, the firm completed a US$6.6bn funding round, giving it a valuation of approximately $157bn and positioning it among the world’s most valuable private companies. Despite this success, OpenAI projects it will remain unprofitable until at least 2029.

The move is not without controversy. Tech entrepreneur Elon Musk, an early backer of OpenAI, questioned the ethics of the for-profit pivot after investing US$50m in the company. OpenAI has clarified that, should the change proceed, the nonprofit arm will “receive full value” for its stake and will continue its mission of advancing ethical AI, according to its board chair.

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