OpenAI considers becoming a for-profit company, paving way for IPO

OpenAI CEO Sam Altman privately told some shareholders that the company is considering a potential change in its governance structure to a for-profit business independent of its nonprofit board, The Information reported on Friday.

One proposed scenario is transforming OpenAI into a for-profit benefit corporation, a model already adopted by competitors like Anthropic and xAI, The Information reported, citing a source familiar with Altman’s remarks. However, these discussions are still in the early stages, and Altman and the board may explore alternative strategies before making a final decision, The Information notes.

In response to inquiries from Reuters regarding the report, OpenAI said, “We remain focused on building AI that benefits everyone. The nonprofit is core to our mission and will continue to exist.”

A shift in governance could pave the way for OpenAI to pursue an initial public offering (IPO). Currently, the company boasts a private valuation of $86 billion. Such a change might also allow Altman to acquire a stake in the rapidly growing firm, a move some investors have been advocating.

Switching to a for-profit structure could pave the way for an eventual initial public offering (IPO) for OpenAI, which is currently valued at $86 billion privately. This change might also enable Altman to acquire a stake in the rapidly growing company, a move that some investors have been advocating.

“Such a change could open the door to an eventual initial public offering of OpenAI, which currently sports a private valuation of $86 billion, and may give Altman an opportunity to take a stake in the fast-growing company, a move some investors have been pushing,” The Information wrote.

In February, OpenAI secured new funding, pushing its valuation to a little over $80 billion, nearly tripling from $29 billion in June 2023. This dramatic increase highlights the heightened interest and substantial financial investment in the AI industry.

Founded in 2015 by Sam Altman and Elon Musk, OpenAI began as a nonprofit research organization dedicated to advancing safe and beneficial artificial general intelligence (AGI). However, in 2020, it transitioned into a commercial entity, marking a pivotal change in its path. Despite facing internal turmoil in November, including Altman’s brief departure and subsequent return, OpenAI continues to lead the dynamic AI market, driven by the success of its flagship product, ChatGPT, launched in 2022.