2 days Ago By Niall Kitson
16 September 2024 OpenAI’s high valuation depends on significant structural changes, reports news agency Reuters. The company’s upcoming funding round, estimated at $6.5 billion, depends on its ability to overhaul its corporate architecture and remove a profit limit for investors.
OpenAI, once a nonprofit company focused on research, has undergone a transformation. The company has moved toward commercialisation by offering subscription plans for services such as ChatGPT as well. To sustain its ambitious pursuit of artificial intelligence, the company needs additional investment.
Investor demand for the funding round appears strong, with participation from existing investors such as Thrive Capital and Khosla Ventures, in addition to tech giants such as Microsoft, Nvidia and Apple. Sequoia Capital is also reportedly in talks to become an investor again. However, the restructuring carries potential risks.
If the changes are not successful, OpenAI may have to renegotiate its valuation, possibly at a lower amount. The company’s board, consisting of CEO Sam Altman and entrepreneur Bret Taylor, must approve such changes. OpenAI has considered converting its nonprofit status to a for-profit organisation, as have competitors Anthropic and xAI.
Removing the profit limit, originally deployed to balance commercial viability with security, would benefit early investors. However, this would come at the expense of future revenues going to the nonprofit. Critics question whether such drastic structural changes are in line with OpenAI’s nonprofit mission.
The company maintains that its core values and nonprofit structure remain intact. Read More: AI Artificial Intelligence ChatGPT GenAI Generative Artificial Intelligence OpenAI.
