OpenAI completes recapitalization to form for-profit corp

OpenAI said it has completed its recapitalization, allowing the AI startup to form a for-profit corporation within a non-profit foundation.

As part of the new structure, the non-profit called OpenAI Foundation, will hold equity in for-profit, which currently is valued at $around $130 billion, said OpenAI in a blogpost.

"The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives," it added.

In a separate blogpost, Microsoft, its investor, noted that the tech giant supports the OpenAI board moving forward with formation of a public benefit corporation (PBC) and recapitalization. Microsoft added it will hold around 27% stake in the for-profit corporation.

Last month, OpenAI and Microsoft had announced that they have signed a non-binding agreement to pave for this recapitalization.

OpenAI started as a non-profit organization and is controlled by a nonprofit board. Microsoft invested in OpenAI in 2019 but as OpenAI grew at a fast clip and products between the two companies competed with each other there has been friction between them.

Notably, Elon Musk, one of the co-founders of OpenAI, has been strongly resisting to the formation of OpenAI's for-profit corp and has also made legal efforts to prevent it.