OpenAI will create a “public benefit corporation” for the transition to commercialization

OpenAI has unveiled a plan to revamp its corporate structure, which includes creating a public benefit corporation (PBC) to manage its growing business and remove the constraints of its current non-profit status. PBC will manage OpenAI’s business, and the non-profit organization will promote charitable initiatives in healthcare, education and science.

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PBCs are businesses that put social mission first along with profit and are recognized by the government as being in the public interest. PBCs are required by law to pursue social or environmental goals in addition to making a profit, and must report to shareholders every two years on progress in achieving these goals.

OpenAI, one of the world’s most valuable startups, began life in 2015 as a research-focused nonprofit but has increasingly sought to reshape itself to attract even more investment as AI has grown in popularity. The latest $6.6 billion funding round, valuing the company at a market value of $157 billion, depended largely on whether OpenAI could change its corporate structure to remove the profit cap for investors.

«We again need to raise more capital than we anticipated. Investors want to support us, but at this scale of capital, they want conventional capital and less structural customization,” the company said in a blog post.

OpenAI plans to transform its existing commercial arm into a public benefit corporation registered in Delaware, which the company says will allow it to “raise the capital it needs on customary terms like others in the space.”

The nonprofit arm of OpenAI will be able to purchase PBC shares at a price determined by independent financial advisors.

Note that OpenAI’s competitors, such as Anthropic and xAI, use a similar business structure.