OpenAI’s latest funding round is expected to come in the form of convertible bonds, with its $150 billion valuation dependent on whether the startup can change its corporate structure and remove a cap on profitability for investors, Reuters reported on Saturday, citing two sources with direct knowledge. From the topic.
The terms of the $6.5 billion funding round highlight the evolution of the ChatGPT maker since its founding in 2015 as a research-based nonprofit working to create cutting-edge AI technologies that would “benefit humanity as a whole, unconstrained by the need to generate financial return.”
If the restructuring fails, the world’s largest AI startup will need to renegotiate its valuation with investors, under which their shares will be converted, perhaps at a lower price, the report added.
OpenAI did not immediately respond to a request for comment from Seeking Alpha.
According to a reportOpenAI has also discussed with its lawyers converting its nonprofit structure into a for-profit public benefit corporation.
Just a few years later, the nonprofit formed a “limited profit” subsidiary, which eventually helped it attract the billions of dollars in investment that was required to develop large language models, ChatGPT, and other expensive generative AI offerings.
Last year, OpenAI’s board ousted CEO Sam Altman amid growing divisions over corporate expansion. Altman returned a week later with a new board that includes 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 members of the original founding team remain. OpenAI was last valued at $86 billion in February.
The funding round is set to be led by Thrive Capital, Microsoft (NASDAQ:MSFTApple (AAPL) and Nvidia (NVDA) are also expected to be in talks to invest in the startup.
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