OpenAI funding and restructuring plans renew pressure on AI’s top startup

OpenAI is seen as leading the artificial intelligence boom that it triggered with the launch of ChatGPT. Yet in an all-hands meeting Thursday, company executives sought to calm staff worried by the surprise resignation of chief technology officer Mira Murati and departure of two other top leaders — the latest in a string of senior exits.

It was a new example of how OpenAI's rapid ascent has consistently entwined success with turmoil.

In addition to addressing the latest departures, executives at the meeting said OpenAI is considering restructuring into a more conventional corporation free from oversight by its nonprofit board, which is pledged to ensure super-intelligent AI benefits all humanity. The maneuver could be legally challenging to complete but make it easier to attract and reward investors.

And the meeting took place as OpenAI worked to finalize new investment that would value the company at $150 billion — about the same as Goldman Sachs — making a nascent business without profits into one of the most valuable start-ups in Silicon Valley history.

The new funding round is expected to provide billions of dollars and to likely include OpenAI's primary existing backer Microsoft, chip maker Nvidia, and investment firm Tiger Global Management. If completed it would help OpenAI keep spending lavishly on tech development.

But a giant funding round could also fuel recent antitrust scrutiny of AI deals and concerns from some investors that the immense spending on the technology will be difficult to recoup in the form of profits.

Apple was earlier this week also expected to take join the funding round but on Saturday the Wall Street Journal reported it had dropped out of deal talks. Spokespeople for Microsoft, Apple, and Tiger Global did not immediately return requests for comment. Nvidia declined to comment.

OpenAI has not disclosed details of the funding or restructuring. The Washington Post's account is based on conversations with four people familiar with company discussions on the condition of anonymity to share internal information.

"We remain focused on building AI that benefits everyone, and as we've previously shared we're working with our board to ensure that we're best positioned to succeed in our mission," OpenAI said in a statement. "The nonprofit is core to our mission and will continue to exist."

A person close to Murati said her departure was unrelated to the restructuring discussions. "I'm stepping away because I want to create the time and space to do my own exploration," she wrote in a message sent to OpenAI employees and posted on X.

As OpenAI has grown from an idealistic nonprofit to a Silicon Valley trendsetter, it has lost most of its founding team ; fired and rehired its CEO; drawn multiple lawsuits alleging copyright infringement ; and been accused by some employees of skimping safety checks and muzzling whistleblowers .

The company's new funding and restructuring plans could lead to fresh drama for a start-up that has already experienced convulsions unusual even for the scrappy tech industry.

Attempting to convert from a nonprofit to a fully for-profit business could run afoul of laws governing charities, said Luís Carlos Calderón Gómez, a law professor at the Cardozo School of Law in New York who specializes in nonprofit law. "The law is precisely trying to prevent stuff like this," he said. "It's not going to be easy."

Regulators around the world have also become increasingly concerned that investments, partnerships and acquisitions in the swiftly evolving AI sector are squashing competition.

The Federal Trade Commission this year opened a study of investments by Microsoft, Amazon and other tech giants into OpenAI and its rival, Anthropic, developer of the chatbot Claude. The Justice Department has been scrutinizing Nvidia's business, and European Union competition commissioner Margrethe Vestager told reporters last week that the bloc had sent questions to the chip maker, a step that could precede a formal investigation into the company.

Tech executives and venture capitalists argue that AI is a technological wave akin to the popularization of the internet, the advent of mobile phones, or the move from holding data on regular computers to cloud storage. Huge investment today will ultimately pay off as AI becomes core to everyday life, proponents say.

Some AI services have already become popular. OpenAI has said more than 200 million people use ChatGPT every week, some as paid subscribers, and many businesses use the company's technology to power their own products. But the economics of many AI offerings remain unproven.

Developing and operating modern AI systems requires highly sought engineers and expensive cloud computing services built on powerful computer chips that consume huge amounts of energy . OpenAI has already raised and spent billions of dollars on AI development and spurred Big Tech partners and rivals to spend billions of their own from cash hoards amassed over the past decade.

Kevin Guo, CEO of Hive, which develops AI tools to help social media companies moderate their services, says AI excitement has broken norms established in previous tech waves.

"If you look at the companies that went public the last 10 years, they didn't really look like this, they didn't raise billions of dollars a year in private rounds," Guo said. "We're in a really interesting capital climate. There's so much money available."

If OpenAI receives funding that values it at $150 billion, it would rank among the most valuable private companies — far above the heights reached by stars of the 2010s tech boom such as Uber and payments company Stripe, according to data from venture capital research firm PitchBook.

One partner at a VC firm that has invested in generative AI start-ups including Anthropic said that while the need for capital to build the technology is clear, expectations for its eventual payoffs can be distorted. "The valuations we're seeing today for AI are becoming a bit stretched," he said, speaking on the condition of anonymity because he was not authorized to comment on the firm's investments.

But he also argued the AI market is at the beginning of a growth cycle set to last five to 15 years. "A lot of these companies haven't figured out how to monetize, that's okay," he said. "They're raising more money to buy time to be monetizing."

OpenAI could use the breathing space provided by new funding to work on revenue growth, executive retention, and calming internal jitters. But CEO Sam Altman in a staff message this week downplaying the loss of Murati that was also posted to X acknowledged that his company's path is rarely conventional.

"Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding," he wrote. "I obviously won't pretend it's natural for this one to be so abrupt, but we are not a normal company."