OpenAI to hand nonprofit parent $100B+ stake in for-profit arm
It could give OpenAI access to public markets while being legally bound to prioritize human benefit alongside profit.
After months of tense negotiations, OpenAI has announced a non-binding agreement with Microsoft that clears the way for its for-profit arm to convert into a public benefit corporation (PBC). The move is significant not just for what it means structurally, but for what it could unlock.
OpenAI says its nonprofit parent will keep control while still gaining an equity stake valued at more than $100 billion. Paired with OpenAI’s $500 billion valuation, it’s now one of the most well-funded philanthropic entities in the world, and ties its mission to the financial success of the for-profit arm.
To be clear, this stake exceeds the $97 billion Elon Musk's failed takeover bid, and instantly gives OpenAI’s nonprofit resources on par with the largest philanthropic organizations in the world.
Already, OpenAI has announced a $50 million grant initiative aimed at boosting AI literacy, community innovation, and economic opportunity.
Emmanuel Oyedeji
Of course, money isn’t the only factor here. Microsoft’s blessing was critical. Since its first $1 billion bet on OpenAI in 2019, Microsoft has invested more than $13 billion in the company, becoming both its main cloud provider and the first to integrate ChatGPT into products.
But as OpenAI’s business exploded into a multi-billion-dollar enterprise, the company grew weary of relying on a single partner. That explains its $300 billion agreement with Oracle for future cloud spending and its partnership with SoftBank on the massive Stargate data center project. The new deal with Microsoft is more of ensuring OpenAI has room to grow while still keeping Microsoft close as a preferred partner.
Challenges are still ahead, though. Regulators in California and Delaware still need to approve the restructuring, and Elon Musk’s ongoing lawsuit against OpenAI lingers in the background. Even so, the company is preparing itself for eventual public funding rounds, and maybe even an initial public offering (IPO), while keeping a social mission at its core.
By becoming a PBC, OpenAI could gain access to public markets while being legally bound to prioritize human benefit alongside profit. If it succeeds, it could set a precedent for the entire AI industry. Investors would see a clearer path to returns, regulators would gain stronger assurances of accountability, and communities worldwide would feel the philanthropic spillover of one of the largest nonprofit stakes in history.
As Bret Taylor, OpenAI’s chairman, put it: “OpenAI started as a nonprofit, remains one today, and will continue to be one–with the nonprofit holding the authority that guides our future.”
Louis Eriakha
