Bota Posted on 2024-12-31 11:26:00

OpenAI needs more capital/ Company's board presents plan to become profitable

From Lidion Kulla

OpenAI needs more capital/ Company's board presents plan to become

The company OpenAI announced that, in order to move towards a new for-profit structure in 2025, it will create a public benefit corporation to oversee commercial operations, removing some of its non-profit restrictions. This will allow the company to function more like a fast-growing startup. "The hundreds of billions of dollars that large companies are investing in the development of Artificial Intelligence shows what it will take for OpenAI to continue to pursue the mission," the OpenAI board announced in a post. "We once again have to raise more capital than we imagined. Investors want to support us, but, at this scale of capital, they need conventional capital", the announcement states.

The pressure on OpenAI is tied to the $157 billion valuation it achieved in just two years, since the company launched its viral chatbot, ChatGPT, and kicked off the generative artificial intelligence boom. OpenAI closed its latest $6.6 billion round in October, preparing to compete aggressively with Elon Musk's xAI, as well as Microsoft, Google, Amazon and Anthropic, in a market projected to reach $1 trillion by income within a decade.

The development of the large language models of ChatGPT and other generative AI products requires a continuous investment in high-powered processors, mainly provided by Nvidia, and cloud infrastructure, which OpenAI receives from its main funder, Microsoft . OpenAI predicts around $5 billion in losses this year.

By becoming a public benefit corporation in Delaware "with common stock," OpenAI says it can pursue commercial operations while separately hiring staff for the nonprofit arm, which can engage in charitable activities in health care, education and science.

The complex structure of OpenAI, as it exists today, is the result of its creation as a non-profit organization in 2015. The company was founded by Sam Altman, Elon Musk and several others as a research laboratory, focused on general artificial intelligence, which was a thoroughly futuristic concept of time.

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