"The AI company said on Thursday it has reached a preliminary agreement with major investor Microsoft that could allow the startup to restructure and, eventually, go public. Both companies signed a non-binding memorandum outlining "the next phase" of their relationship, with a definitive agreement expected in the coming months. The announcement was light on details; financial small print was not disclosed, and the companies said they are still finalizing contractual terms."
"OpenAI's corporate structure is unusual. Originally founded as a nonprofit, it established a capped-profit arm in 2019, which allowed for large investments such as Microsoft's. The company has been trying to restructure its profit-focused entity into a more conventional corporate model to allow it to raise additional capital, while leaving the nonprofit parent in control of the startup's operations. A conversion to a more traditional structure, such as a Public Benefit Corporation, could allow the company to combine its public mission objectives with profit generation."
OpenAI signed a non-binding memorandum with Microsoft outlining the next phase of their relationship and plans to finalize a definitive agreement in coming months. Financial terms and contractual details remain under negotiation. The memorandum seeks to ease structural and competitive tensions with Microsoft and to enable restructuring of OpenAI's capped-profit arm. The restructuring could convert the profit-focused entity into a Public Benefit Corporation, combining mission objectives with profit generation and facilitating additional capital raises. A PBC conversion could create a pathway to a future IPO. CEO Sam Altman expressed 'very conflicted' feelings about the timing of a public offering.
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