Completing "monetization restructuring," OpenAI paves the way for IPO—will AI's peak moment arrive?
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Completing "monetization restructuring," OpenAI paves the way for IPO—will AI's peak moment arrive?
OpenAI is expected to consume $115 billion by 2029, while its revenue this year is projected to be only $13 billion, resulting in a massive funding gap.
Navigating Web3 tides with focused insightsAuthor: Zhao Ying
Source: Wall Street Insights
OpenAI and Microsoft have "amicably parted ways," completing a year-long corporate restructuring and formally transitioning into a Public Benefit Corporation (PBC), paving the way for a future IPO.
As OpenAI's largest shareholder, Microsoft holds a 27% stake valued at $135 billion following the restructuring, based on OpenAI's latest valuation of $500 billion. On Tuesday, both parties signed an agreement under which Microsoft will retain intellectual property rights to use OpenAI models and products until 2032, while both companies gain greater freedom to collaborate independently with competitors.
During an all-hands meeting on Tuesday, OpenAI CEO Sam Altman indicated that a public offering could be possible in the future but declined to specify a timeline. In a public livestream, he said an IPO was a potential option "given our capital needs." OpenAI expects to spend $115 billion by 2029, while projected revenue this year is only $13 billion, leaving a massive funding gap.
The restructuring diluted early investors' equity, as the nonprofit arm, the OpenAI Foundation, received a 26% stake worth $130 billion. However, for investors, this opens the door to future liquidity exits. SoftBank Group’s board has approved its $22.5 billion investment plan, contingent upon the completion of the restructuring.
IPO Path Clarified, Capital Needs Urgent
Altman revealed during the livestream that OpenAI has incurred $1.4 trillion in "financial obligations" due to its commitment to use or develop 30 gigawatts of data center capacity. However, the company's expected revenue this year is only $13 billion, creating a vast shortfall against the anticipated $115 billion in spending by 2029 and server-related expenses.
An IPO would provide crucial capital to meet fierce competition from rivals like Google and xAI. The restructuring converted early investors’ stakes into common equity and removed previous caps on financial returns to shareholders, eliminating structural barriers to a potential IPO and significantly enhancing appeal to public market investors.
While an IPO would further dilute existing shareholders, it is critical for the company’s ongoing operations. The restructuring has received tacit approval from the attorneys general of Delaware and California, who stated on Tuesday they would not object, citing OpenAI’s reaffirmed commitment to its original nonprofit mission of benefiting humanity.
As part of its commitment to state prosecutors, OpenAI agreed to keep its Safety and Security Committee independent from the corporate board. Led by Zico Kolter, chair of Carnegie Mellon University’s Machine Learning Department, the committee has the authority to block the release of dangerous AI. A new provision in the corporate charter signed by Altman on Tuesday stipulates that the board must consider only humanity’s benefit—not shareholder interests—when making decisions on safety and security matters.
Core of Restructuring: Transition to PBC, Removal of Return Caps
OpenAI has transitioned from a nonprofit to a Public Benefit Corporation, a special corporate structure under U.S. law that pursues both public benefit and profit objectives. The most significant change in this restructuring is converting investor holdings into common equity and removing prior limits on potential financial returns.
The OpenAI Foundation now holds a 26% stake in the restructured company and retains control over the for-profit board through its power to appoint and remove directors. The foundation says it will use an initial $25 billion to support health research and address societal risks posed by AI, such as AI-driven pandemics and job displacement.
If OpenAI reaches a valuation exceeding $5 trillion within 15 years—ten times its current value—the foundation will receive warrants for additional shares. According to individuals involved in the restructuring talks, at a $5 trillion valuation, the foundation could obtain shares worth hundreds of billions of dollars. No company globally currently approaches a $5 trillion market cap, although NVIDIA is nearing that level.
End of a Historic Partnership: The Amicable Split with Microsoft
The relationship between Microsoft and OpenAI underwent a major shift in this restructuring. Microsoft previously invested approximately $13 billion in OpenAI and enjoyed preferential profit distribution rights under the old structure—advantages that no longer exist under the new agreement.
Under the new agreement, the relationship becomes more flexible:
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Intellectual Property and Collaboration: Microsoft retains perpetual rights to use OpenAI’s intellectual property, covering all products developed by OpenAI before 2032 and non-public IP internally developed before 2030. Even if OpenAI achieves Artificial General Intelligence (AGI) in the future, Microsoft may continue using its models, subject to applicable safety safeguards.
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Open Collaboration: OpenAI gains the freedom to work with cloud providers other than Microsoft, such as Oracle, without requiring Microsoft's approval. In return, Microsoft can also deepen collaboration with OpenAI’s competitors. Microsoft CEO Satya Nadella said in an interview that he welcomes AI models from Anthropic or even Google being deployed on its Azure cloud platform. According to insiders, Microsoft engineers are already working to directly integrate Anthropic’s Claude model into Office applications.
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Hardware Exclusion: The agreement explicitly excludes consumer hardware. This means OpenAI does not need to share details with Microsoft when developing AI-powered consumer electronics, preserving room for independent exploration of new business lines.
In addition, OpenAI committed to paying Microsoft $250 billion in cloud hosting fees to Azure over the coming years, securing Microsoft long-term, stable revenue.
Reassurance for Investors and Employees
The restructuring has reassured investors and current and former employees by opening the path to an IPO. SoftBank Group’s board has approved its $22.5 billion investment, which is contingent on the restructuring’s completion. SoftBank’s funds form part of a $41 billion financing round that gave investors including Dragoneer Investment Group and Thrive Capital a combined 15% stake in the company, now valued at $75 billion.
Investors such as Thrive Capital, which invested $6.6 billion in OpenAI last fall, hold a 4% stake worth $20 billion. Current and former employees, along with investors who purchased shares from them, collectively own about 26% of the company. In recent years, employees have sold around $10 billion worth of shares to outside investors, reflecting strong market demand amid soaring valuations.
Jonathan Cofsky, portfolio manager at Janus Henderson, oversees two funds holding over $800 million in Microsoft stock. He said: "This announcement eliminates a great deal of uncertainty for Microsoft and its shareholders." He believes Microsoft’s continued exclusive right to resell OpenAI models in the cloud is more valuable than governance control over the startup. "Customer adoption of Azure driven by the OpenAI relationship will continue to benefit Microsoft well beyond 2032."
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