OpenAI’s for-profit model is ensconced in both the public benefit and profit-making corporations.

Unlike other AI research labs that are founded as non-profit organizations OpenAI’s business model signifies the organization as a publicly beneficial and profitable entity.
OpenAI has now been available in the market for some months, but it has clarified how it will transform into a profitable venture. The for-profit wing of OpenAI said it planned to become a Public Benefit Corporation at some point early this year, presumably in 2025, according to a blog post released by the board of directors on Thursday. PBCs or B Corps are organizations that operate on the traditional market spaces and are in a constant endeavour of making money for their shareholders and also avoid ‘doing harm’.

“By 2025 we need to become not only the lab and the start-up – we need to become the consistent company,” OpenAI said that many of its competitors registered as PBC, including Anthropic and even Elon’s xAI. “[The move] would also let us faced the wall and obtain the needed money on normal terms compared to other players in this market.”

The new structure would mean that the non-profit Arm of OpenAI would retain an ownership in the for-profit Arm ‘in the form of equity at a fair value to be determined with the help of independent financial advisors,’ while not running the company. “According to the plan that we lay out, OpenAI would become one of the best-funded non-profit organizations in history,” they added.

OpenAI did not reveal whether CEO Sam Altman will become an equity holder of the restructured firm. That board deciding briefly to fire Altman last year, and then reinstating him, set off the institutional crisis leading to this week’s announcement by OpenAI. Some analysts expect that OpenAI, limited to commercial business, can reach $150 billion in value.

Open AI said it would require at least $10 billion in 2019 to build artificial general intelligence. In the month of October, the company raised $6 billion in new funds. “These hundreds of billions of dollars that major companies are now plowing into AI development indicates what it will really take for OpenAI to continue pursuing the mission,” said OpenAI.

“We again have to raise more capital than we thought we would have to.” Shareholders need to invest with us but at this level of capital, want traditional equity and less structural customization.” Still, there is one more problem OpenAI will likely encounter multiple times with the advancement of the plan’s implementation.

Meta sued Elon Musk and Tesla for damaging its brand last year and recently wrote a letter to California’s attorney general asking him not to let OpenAI convert to a for-profit entity because it would be ‘wrong’ and could lead to a flood of other start-ups which are technically charitable until they decide they might be profitable.