OpenAI’s latest funding round is expected to come in the form of convertible notes, with its $150 billion valuation dependent on whether the startup can change its corporate structure and remove a profit cap for investors, Reuters reported Saturday, citing two sources with direct knowledge of the matter.
The $6.5 billion funding round conditions highlight the evolution of the ChatGPT-maker since its founding in 2015 as a research-based non-profit creating cutting-edge AI technologies that would “benefit humanity as a whole, unconstrained by a need to generate financial return.”
If the restructuring is unsuccessful, the world’s largest artificial intelligence startup will need to renegotiate its valuation with investors at which their shares will be converted, possibly at a lower number, the report added.
OpenAI did not immediately respond to a Seeking Alpha request for comment.
According to the report, OpenAI has also discussed with its lawyers about converting its non-profit structure to a for-profit benefit corporation.
Only a few years later, the non-profit formed a “capped profit” subsidiary, which eventually helped it attract the billions of dollars in investment that were needed to develop its large language models, ChatGPT, and other expensive generative AI offerings.
Last year, the OpenAI’s board booted out chief executive Sam Altman over a growing schism on corporate expansion. Altman returned a week later with a new board featuring former Salesforce (CRM) co-CEO Bret Taylor as chairman, former Treasury Secretary Larry Summers, and Quora co-founder and CEO Adam D’Angelo.
Today, only a handful of the original founding team remains. OpenAI was last valued at $86 billion in February.
The funding round is set to be led by Thrive Capital, and Microsoft (NASDAQ:MSFT) is also expected to participate. Apple (AAPL) and Nvidia (NVDA) have been in talks about investing in the startup.
