OpenAI is reportedly preparing for a new financing round worth $6.5 billion in convertible notes, with its valuation potentially soaring to $150 billion. However, this massive valuation hinges on the company's ability to restructure its corporate framework and remove the existing profit cap for investors, sources with direct knowledge of the matter revealed.
The company, once a research-focused non-profit, has evolved significantly as it pursues the ambitious goal of developing artificial general intelligence (AGI). As OpenAI transitions, the structural changes it is considering—particularly the removal of the profit cap—are aimed at attracting substantial investment to support its expensive technological advancements.
Current investors such as Thrive Capital, Khosla Ventures, and Microsoft are expected to participate in the funding round. New investors, including industry giants Nvidia and Apple, are also poised to join. Sequoia Capital is in talks to return as an investor. The funding round is expected to close within the next two weeks due to OpenAI's rapid revenue growth and strong investor demand.
However, if the proposed restructuring is unsuccessful, OpenAI could face a renegotiation of its valuation, which may lead to a lower conversion rate for investor shares. This restructuring effort would require the approval of OpenAI’s non-profit board, which includes CEO Sam Altman and other prominent figures like entrepreneur Bret Taylor.
Discussions are underway about transforming OpenAI from a non-profit entity into a for-profit benefit corporation, a model that some of its competitors, such as Anthropic and xAI, have adopted. While the outcome remains uncertain, the potential removal of the profit cap would result in greater returns for early investors, though it could also spark concerns about OpenAI's governance and its shift from its original non-profit mission.
OpenAI initially implemented the profit cap to ensure that the development of AGI would prioritize safety and sustainability over pure profit-maximization. This change, while incentivizing investment, could challenge the balance between commercial interests and OpenAI's foundational values.
