OpenAI’s latest funding round is anticipated to involve convertible notes, with its $150 billion valuation contingent upon the company’s ability to alter its corporate structure and remove the profit cap for investors, according to a report by Reuters, citing two sources with direct knowledge of the matter.
The conditions of the $6.5 billion funding round underscore the evolution of OpenAI since its inception in 2015 as a non-profit research entity focused on developing advanced AI technologies intended to benefit humanity without the need to generate financial returns.
Should the restructuring attempt fail, OpenAI, which is currently recognized as the world’s largest artificial intelligence startup, will need to renegotiate its valuation with investors regarding the conversion terms of their shares, potentially resulting in a lower valuation, the report added.
OpenAI did not immediately respond to Seeking Alpha’s request for comment.
According to the Reuters report, OpenAI has also consulted with its legal advisors regarding the possibility of transitioning from a non-profit structure to a for-profit benefit corporation.
In recent years, the non-profit formed a “capped profit” subsidiary, which facilitated the attraction of the substantial investments necessary to develop its large language models, such as ChatGPT, and other costly generative AI products.
Last year, OpenAI’s board dismissed then-CEO Sam Altman amidst growing disagreement over corporate expansion strategies. Altman returned to his position a week later, accompanied by a new board that includes former Salesforce co-CEO Bret Taylor as chairman, former Treasury Secretary Larry Summers, and Quora co-founder and CEO Adam D’Angelo.
Currently, only a few members of the original founding team remain. OpenAI was last valued at $86 billion in February.
The upcoming funding round is expected to be led by Thrive Capital, with participation from Microsoft. Additionally, Apple and Nvidia have been reported to be in discussions about investing in the startup.
