OpenAI Reaches a Deal to Settle Financial Issues with Its Partner Microsoft
- OpenAI has reached a deal to settle financial issues with its partner Microsoft, which invested $13 billion in exchange for 49% of OpenAI’s future profits.
- The deal involves restructuring their relationship and signing a nonbinding memorandum of understanding, with plans to formalize it in a contract.
- OpenAI is providing an equity stake exceeding 20% of the reorganized company, valued at at least $100 billion for the nonprofit that controls the organization.
- This move marks an essential step in OpenAI’s shift from being managed by a nonprofit to becoming a public benefit corporation, which would enable it to issue shares on the stock market and raise capital from the general public.
- The nonprofit managing OpenAI has launched a $50 million grant initiative to support nonprofit and community organizations in three areas: AI literacy and public understanding, community innovation, and economic opportunity.
IBL News | New York
OpenAI announced on Thursday that it reached a tentative deal to settle financial issues with its partner Microsoft, which invested over $13 billion in the company in exchange for 49% of OpenAI’s future profits.
Microsoft and OpenAI provided no additional details of the deal, saying in a joint statement that they had signed a nonbinding memorandum of understanding to restructure their relationship and that they would look to formalize it in a contract.
Also on Thursday, OpenAI announced that it was providing an equity stake that will exceed 20 percent of the reorganized company and will be worth at least $100 billion to the nonprofit that controls the organization.
Both moves were considered essential steps in OpenAI’s shift from being managed by a nonprofit to becoming a public benefit corporation.
As its business has needed to raise more money, OpenAI has been trying to transition to a more traditional for-profit structure, specifically a Public Benefit Corporation (PBC). That might enable the company to eventually issue shares on the stock market and raise capital from the general public.
The nonprofit that now manages OpenAI would become “one of the most well-resourced philanthropic organizations in the world,” said Bret Taylor, OpenAI’s board chair in a blog post.
As part of this next phase, the OpenAI nonprofit has launched a call for applications for the first wave of a $50 million grant initiative to support nonprofit and community organizations in three areas: AI literacy and public understanding, community innovation, and economic opportunity.