OpenAI, an artificial intelligence powerhouse founded in 2015 as a research-focused nonprofit, is exploring a significant organizational shift that could create a more conventional revenue-generating company alongside its nonprofit foundation.

In a blog post published Friday, the company’s board of directors revealed that it is evaluating a proposal to convert its business operations into a Delaware Public Benefit Corporation (PBC). This structure would allow the for-profit branch to seek profits while maintaining a societal mission. The nonprofit arm would retain a significant stake in the for-profit entity, holding shares valued by independent financial advisors.

The ambitious project

The proposed transformation occurs while OpenAI seeks to meet the dual requirement of advancing its ambitious AI development goals and raising substantial investments. According to the board, the new structure would attract greater investor interest while preserving the nonprofit’s ability to execute charitable initiatives in areas such as health, education and science.

OpenAI’s journey has been one of evolution from its idealistic beginnings to its current status as a global leader in artificial intelligence. Originally founded to ensure that AI development prioritizes safety and the public good, the organization created a for-profit subsidiary in 2019 to manage the immense costs of developing AI models advances. By 2022, OpenAI had become a dominant force in the field, with its ChatGPT chatbot reshaping the public and industry’s perception of AI.

The decision to consider restructuring follows consultations with regulators in California and Delaware. While the move could simplify operations and attract investors, it has also sparked controversy. Co-founder Elon Musk recently filed a lawsuit against OpenAI, alleging a violation of its original nonprofit agreement and seeking to prevent its conversion to a for-profit entity while legal proceedings continue.

The board defended the proposal, saying it would ensure the long-term success of the project. for-profit branch while allowing the association to better fulfill its mission. “We must once again raise more capital than we imagined,” the board explained, noting that investors prefer conventional equity structures.

(With inputs from Bloomberg)