OpenAI completed its yearlong restructuring last Tuesday that will allow it to go public. The transition converts the prior investments made by Microsoft and other backers into regular equity, with Microsoft owning 27%, OpenAI Foundation (its nonprofit arm) taking 26%, OpenAI employees owning 26%, and other investors collectively owning 20%.
Altman doesn't have a stake in the company, according to The Information sources, but is heavily invested in companies that do business with OpenAI — which is NOT a conflict of interest because those types of rules don't apply anymore.
Quick History of OpenAI's structure:
- OpenAI began in 2015 as a nonprofit research lab founded by Sam Altman, Elon Musk, and others with the mission to develop safe artificial intelligence that benefited humanity.
- In 2019, it created a for-profit subsidiary, OpenAI LP, under a “capped-profit” model that allowed investors to earn up to 100× returns while the nonprofit parent retained ultimate control.
- That unusual hybrid structure drew scrutiny for giving investors influence without shareholder rights and for the lack of transparency around who actually governed the company.
- Elon Musk left the board in 2018 amid disagreements over the company’s direction and later sued OpenAI in early 2024, accusing it of abandoning its nonprofit mission and becoming a “closed-source, profit-driven” arm of Microsoft.
- The lawsuit was dismissed, but invited questions over whether OpenAI’s close partnership with Microsoft, which invested over $13B in the company, undermined its independence and commitment to open research.
- Several former employees and AI ethicists criticized OpenAI's secretive governance, limited oversight by the nonprofit board, and unclear boundaries between OpenAI’s nonprofit and for-profit entities.
- Sam Altman didn't give a fuck what any critics thought and pushed the transition through.
Under the new structure, shareholders won’t get direct input over how OpenAI is run, but the deal lifts a prior cap on the potential financial return that they could receive from their stake.
Also as part of the agreement, Microsoft secured a commitment from OpenAI to spend $250B renting its servers over an unspecified period, similar to the commitment OpenAI recently made with Oracle. So Microsoft invested $13B and gets $250B coming back to it, plus equity in the company? That's a hell of a deal! (Assuming OpenAI can later afford it.)
Is OpenAI going to have an IPO?
CEO Sam Altman told employees last week that a public offering was bound to happen in the future, but didn't provide a specific date. Later in a public livestream video, he said an offering was likely “given the capital needs we will have.” (You know… the $1.4 trillion worth of future-dated checks OpenAI has written that it doesn't currently have the money or revenue to support!)
Rumor are already circulating that an IPO could come as soon as 2026 and value the company at up to $1 trillion — which would put it last position on the list of top 10 publicly traded U.S. companies by market cap (based on current valuations).
An OpenAI spokesperson told Reuters:
“An IPO is not our focus, so we could not possibly have set a date. We are building a durable business and advancing our mission so everyone benefits from AGI.”
However OpenAI might not be able to afford to wait, so realistically the IPO could be sooner than they admit.