OpenAI may pay its nonprofit arm 'billions of dollars' in conversion to for-profit | TechCrunch
Dec 18, 2024 - techcrunch.com
OpenAI is in the process of transitioning away from its current structure as a for-profit corporation governed by a nonprofit board. The New York Times reports that OpenAI is negotiating to pay the nonprofit board billions of dollars to relinquish control. This change is necessary because if OpenAI does not alter its corporate structure within two years, the $6.6 billion it recently raised will convert to debt. OpenAI board chairman Bret Taylor mentioned at the Axios’ AI+ Summit that they are considering how to reconfigure the existing structure, which includes both nonprofit and for-profit elements.
OpenAI was originally founded as a nonprofit in 2015 by CEO Sam Altman and several AI researchers and entrepreneurs. However, by 2018, the organization faced challenges in raising sufficient capital to support its goals. This led to the adoption of a new corporate structure that allowed for-profit operations to attract investors while still being accountable to the nonprofit board. The current discussions aim to resolve the complexities of this dual structure and secure the company's financial future.
Key takeaways:
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OpenAI is transitioning away from a for-profit corporation governed by a nonprofit board.
The nonprofit board could receive billions of dollars as compensation for ceding control.
OpenAI must change its corporate structure within two years to avoid converting $6.6 billion in raised funds to debt.
OpenAI was founded as a nonprofit in 2015 but adopted a for-profit structure in 2018 to attract investors.
