OpenAI's $300 Billion Public-Benefit Shift Faces Scrutiny As Delaware AG Moves To Hire Investment Bank for Independent Valuation: Report
OpenAI‘s ambitious plan to restructure into a $300 billion public-benefit corporation is encountering significant obstacles as state regulators demand independent valuations and major investors clash over equity distribution.
What Happened: Delaware’s attorney general is hiring an investment bank to independently value the equity OpenAI’s nonprofit parent will hold in the new for-profit entity, reported The Wall Street Journal, citing sources.
The artificial intelligence company aims to convert its for-profit subsidiary into a public-benefit corporation valued at $300 billion, matching its most recent funding round valuation.
The restructuring needs approval from attorneys general in Delaware and California. OpenAI must fairly allocate equity to its nonprofit parent while appeasing private investors.
Microsoft (NASDAQ:MSFT), its largest backer, can block the deal and is disputing its equity share. Both sides have hired investment banks for guidance.
Delaware’s attorney general did not immediately respond to Benzinga's request for comment.
Why It Matters: OpenAI faces a year-end deadline or risks losing up to $20 billion from SoftBank. It needs the funding to develop new AI models, ship 100 million AI companion devices, and expand global data centers under its Stargate project.
The conversion also faces legal challenges from co-founder Elon Musk, who is attempting to block the restructuring through litigation scheduled for trial next year.
The restructuring marks OpenAI’s transition from its 2015 nonprofit founding to a for-profit model aimed at attracting investment and achieving profitability. OpenAI plans to reduce Microsoft’s revenue share from 20% to 10% by 2030.
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