OpenAI Targets PBC Status to Integrate Social and Shareholder Goals

OpenAI wants to turn its for-profit arm into a Delaware Public Benefit Corporation. This will meet society’s and shareholders’ needs while also involving nonprofits heavily.

The ChatGPT maker’s for-profit arm will be changed into a Delaware public benefit corporation (PBC). A PBC is a business that puts society’s and its shareholders’ needs first.

OpenAI said in a blog post that the nonprofit will have a “significant interest” in the PBC through shares chosen by independent financial advisers. It will also be one of the “best-resourced nonprofits in history.”

OpenAI began in 2015 as a non-profit organization whose main goal was research. Four years later, to cover the high costs of AI development, OpenAI transitioned into a for-profit unit.

Due to its unique structure, the nonprofit was able to manage the for-profit portion. The firing of Sam Altman as CEO last year sparked significant controversy, but he returned a few days later due to employee fury.

OpenAI Seeks Funding Amid AGI Race

As the expensive search for artificial general intelligence (AI that is smarter than humans) heats up, OpenAI has been trying to make changes to get more money.

According to Reuters, the ChatGPT maker’s ability to alter its business structure and remove an investor profit cap was a prerequisite for a new $6.6 billion funding round worth $157 billion.

“Once again, we need to secure more funding than we initially anticipated.” An early-stage company backed by Microsoft said on Friday, “Investors want to back us but, at this level of capital, need standard equity and less structural customization.”