OpenAI Eyes $150 Billion Valuation as Funding Round Looms Amid Strategic Restructuring

OpenAI is reportedly in discussions to raise $6.5 billion at a company valuation of $150 billion. This funding round is expected to be completed within two weeks, utilizing convertible notes, with its valuation contingent on the company's restructuring efforts and the removal of investor profit caps.

Founded in 2015 as a nonprofit research initiative aiming to develop AI for the global good, OpenAI has rapidly commercialized through subscription services for products like ChatGPT, boasting over 200 million users. The organization's current structure, with a nonprofit parent controlling its for-profit arm, presents challenges in attracting investors.

OpenAI's CEO, Sam Altman, remarked in a staff meeting that the company might transition to a more traditional for-profit model next year. Discussions with legal advisors about restructuring into a for-profit benefit corporation, similar to competitors Anthropic and xAI, are ongoing.

The removal of profit caps remains a complex issue. While lifting these caps could increase early investor returns, it may also raise concerns regarding governance and deviation from OpenAI's nonprofit mission. Approval from OpenAI's nonprofit board, which includes Altman and several entrepreneurs, is necessary.

OpenAI has defended the profit cap as a means to balance AGI research between commercial success, safety, and sustainability. Initially, investors faced a return limit of 100 times their investment, and future rounds are expected to offer lower multiples.

This innovative funding model has enabled OpenAI to raise over $10 billion, largely from Microsoft. The company's valuation reached $80 billion during a funding round led by Thrive Capital earlier this year. The current funding effort reflects substantial investor interest, driven by OpenAI's revenue growth, with participation anticipated from existing backers like Microsoft, as well as new players like Nvidia and Apple.