Anyone who thought OpenAI’s fundraising is nearing the end is in for a surprise, with the company admitting it needs “to raise more capital than we’d imagined” to succeed.

OpenAI has already raised billions of dollars in funding on the promise of developing true artificial general intelligence (AGI), the term used for AI that can rival human intelligence and learning capabilities. Simultaneously, the company is in the process of transitioning to a for-profit company, a move that has sparked legal challenges. At the same time, the company’s latest round of funding was provided on the condition that OpenAI successfully makes the transition within two years.

In that context, it’s not surprising the company has authored a blog post defending its transition and bracing the public for just how costly AI development will continue to be. The blog first highlights how the company was initially structured.

In 2019, we became more than a lab – we also became a startup. We estimated that we’d have to raise on the order of $10B to build AGI. This level of capital for compute and talent meant we needed to partner with investors in order to continue the non-profit’s mission.

We created a bespoke structure: a for-profit, controlled by the non-profit, with a capped profit share for investors and employees. We intended to make significant profits⁠(opens in a new window) to pay back shareholders, who make our mission possible, and have the remainder flow to the non-profit. We rephrased our mission to “ensure that artificial general intelligence benefits all of humanity” and planned to achieve it “primarily by attempting to build safe AGI and share the benefits with the world.” The words and approach changed to serve the same goal—benefiting humanity.

Moving forward, OpenAI says it will have to become more, establishing a structure that allows it to thrive and be sustainable.

As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company. The Board’s objectives as it considers, in consultation with outside legal and financial advisors, how to best structure OpenAI to advance the mission of ensuring AGI benefits all of humanity have been:

1. Choose a non-profit / for-profit structure that is best for the long-term success of the mission. Our plan is to transform our existing for-profit into a Delaware Public Benefit Corporation⁠(opens in a new window) (PBC) with ordinary shares of stock and the OpenAI mission as its public benefit interest. The PBC is a structure⁠(opens in a new window) used⁠ by⁠(opens in a new window) many⁠(opens in a new window) others⁠(opens in a new window) that requires the company to balance shareholder interests, stakeholder interests, and a public benefit interest in its decisionmaking. It will enable us to raise the necessary capital with conventional terms like others in this space.
2. Make the non-profit sustainable. Our plan would result in one of the best resourced non-profits in history. The non-profit’s significant interest in the existing for-profit would take the form of shares in the PBC at a fair valuation determined by independent financial advisors. This will multiply the resources that our donors gave manyfold.
3. Equip each arm to do its part. Our current structure does not allow the Board to directly consider the interests of those who would finance the mission and does not enable the non-profit to easily do more than control the for-profit. The PBC will run and control OpenAI’s operations and business, while the non-profit will hire a leadership team and staff to pursue charitable initiatives in sectors such as health care, education, and science.

In the blog post, OpenAI reveals the astonishing cost of AI development.

“The hundreds⁠(opens in a new window) of⁠(opens in a new window) billions⁠(opens in a new window) of⁠(opens in a new window) dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission. We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness.”

OpenAI’s Dilemma

As the company outlines in its blog post, developing AGI is a costly endeavor, one in which no one knows the true cost. In addition, the clock is ticking for OpenAI to complete its transition to a for-profit. If the company fails to do so by the two-year deadline, it will have to return its latest round of funding. Meanwhile, Elon Musk has filed a lawsuit challenge OpenAI’s transition, as well as a temporary injunction to prevent the company from moving forward until the court can settle the matter.

At the same time, OpenAI has had a mass exodus of some of its best and brightest engineers, researchers, and executives over concerns the company has lost its way and is no longer focused on its original mission to develop AI safely. In fact, some departing executives have accused the company of prioritizing profits over safety.

Ultimately, 2025 could be a make-or-break year for OpenAI, and the company’s latest blog post could well be a recognition of that fact.