OpenAI’s For-Profit Shift Faces Valuation Scrutiny and Investor Tensions

OpenAI’s transformation from a nonprofit pioneer into a profit-seeking powerhouse represents one of the most complex and consequential transitions in the modern tech landscape. As it works to convert its for-profit subsidiary into a public-benefit corporation, valued at an estimated $300 billion, OpenAI faces not only investor pressure but also a mounting web of legal, financial, and regulatory scrutiny.

Founded in 2015 as a nonprofit devoted to the safe development of artificial intelligence, OpenAI introduced a capped-profit subsidiary in 2019 to attract commercial capital. Now, with ambitions to go public, it seeks to streamline its structure into a conventional for-profit company, while still pledging to maintain its social mission through a public-benefit charter. However, the road ahead is fraught with complications.

A major development came with Delaware Attorney General Kathy Jennings hiring an investment bank to independently value the equity that OpenAI’s nonprofit parent will hold in the restructured entity. This move could delay the conversion and potentially escalate tensions among stakeholders. “The independent evaluation could prolong the transition, or gum up OpenAI’s plans even further” (Zeff, 2025).

For OpenAI to complete its conversion, it must secure approvals from both the California and Delaware attorneys general, jurisdictions where it holds significant operational and legal ties. Delaware law mandates that the nonprofit must receive fair compensation for assets transferred to the for-profit entity, which could include valuable intellectual property and existing infrastructure. According to legal experts, “Assets previously donated to the public benefit cannot be repurposed to private benefit without compensating the public for the loss” (Francis et al., 2024).

Meanwhile, OpenAI’s largest investor, Microsoft, has invested $13 billion into its for-profit subsidiary and reportedly holds the power to block the restructuring. Microsoft and OpenAI have already hired their own investment banks to advise on the deal, but they appear to be at odds over equity allocation in the new corporate framework. The question of who gets what, especially in a company expected to top a $150 billion valuation post-funding, is central to ongoing negotiations. OpenAI must prove “to state regulators that the nonprofit will be fairly compensated and satisfy private investors” who are seeking a large stake in the company. (Jin & Driebusch, 2025).

Investor enthusiasm is evident, with recent fundraising efforts bringing in $6.5 billion from backers including Microsoft, Nvidia, and a UAE state-backed firm. Yet the conversion must be completed within two years to avoid the risk of losing up to $20 billion in potential funding, including from major contributors like SoftBank. This high-stakes timeline adds pressure to an already complex process involving asset valuations, legal structuring, and governance redesign.

In parallel, OpenAI must resolve its ongoing legal battle with co-founder Elon Musk, who alleges the original nonprofit framework is being violated. His previous $97.4 billion takeover offer, though rejected, may have inadvertently set a high bar for how regulators view the nonprofit’s value. The situation exemplifies how legacy relationships and internal discord can further complicate high-profile corporate transformations.

Ultimately, OpenAI’s proposed conversion aims to simplify ownership, provide uncapped equity to investors, and solidify its competitive edge in the rapidly evolving AI industry. But simplicity comes at a cost. Regulators, investors, and the public will be watching closely to ensure that the transition doesn’t compromise the nonprofit’s original mission or unfairly enrich select stakeholders at the expense of the broader public good.

As OpenAI navigates these regulatory and financial shoals, its transformation will likely serve as a case study in how mission-driven tech entities transition to market-driven giants, balancing innovation, ethics, and capital in the age of artificial intelligence.

Sources

Francis, Theo, et al. “OpenAI’s Complex Path to Becoming a For-Profit Company.” The Wall Street Journal, 29 Sept. 2024, https://www.wsj.com/tech/ai/openais-complex-path-to-becoming-a-for-profit-company-bad21a42?mod=article_inline.

Jin, Berber, and Corrie Driebusch. “Delaware AG Hiring Investment Bank to Advise on OpenAI Conversion.” The Wall Street Journal, 28 May 2025, https://www.wsj.com/tech/ai/openai-profit-value-delaware-ag-bank-ff7b4718?mod=tech_lead_story.

Zeff, Maxwell. “Delaware Attorney General Reportedly Hires a Bank to Evaluate OpenAI’s Restructuring Plan.” MSN, https://www.msn.com/en-us/money/companies/delaware-attorney-general-reportedly-hires-a-bank-to-evaluate-openai-s-restructuring-plan/ar-AA1FJByI?ocid=BingNewsSerp.