OpenAI mulls dropping profit restrictions ahead of $100 billion valuation push
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OpenAI is considering significant changes to its business model as it gears up for a new investment round that could push its valuation beyond $100 billion, the Financial Times reported on Aug. 30, citing insiders familiar with the matter. Sources told the newspaper that the AI research company is exploring the possibility of modifying its current “capped for-profit” structure to make it more appealing to large-scale investors. The development comes amid reports that OpenAI is likely to face financial woes in the coming months. Open discussions According to the report, OpenAI is in discussions about potentially removing these profit caps. Such a change would allow investors to earn unrestricted profits based on the company’s performance, a move intended to entice major backers. Thrive Capital, which may invest around $1 billion, is expected to lead the anticipated funding round, while tech giants Microsoft, Apple, and Nvidia have also been mentioned as potential participants. If the company’s valuation climbs as expected, Microsoft, already a minority shareholder in OpenAI, could see its stake influenced by the introduction of other significant players. Currently, OpenAI operates as a hybrid organization, combining both non-profit and capped for-profit elements. The board of directors oversees this dual structure, prioritizing the non-profit’s mission to ensure AI advancements benefit all of humanity. Investors in the capped for-profit arm, including Microsoft, have so far been subject to restrictions on their returns to prevent profit motives from overshadowing ethical considerations. Concerns If OpenAI decides to lift these caps, it could provide more lucrative opportunities for investors, although it raises concerns about how the company will continue to honor its commitment to its mission-driven goals. Furthermore, with major tech firms like Microsoft, Apple, and Nvidia reportedly interested in increasing their stakes, there is anxiety about the level of influence these large corporations might…
Filed under: News - @ August 31, 2024 12:06 am