OpenAI's $40B funding hinges on for-profit transition by year-end
What's the story
OpenAI, the Microsoft-backed artificial intelligence company, is facing a deadline to become a for-profit entity.
The restructuring is essential for the tech firm to close a $40 billion funding round led by SoftBank.
If OpenAI doesn't complete the transition by year's end, SoftBank may cut its investment in the tech firm down to $20 billion, The Wall Street Journal reported.
Investment breakdown
Transition requires approval from Microsoft
The funding plan starts with a $10 billion investment, with an additional $30 billion contingent on OpenAI's shift to a for-profit model.
SoftBank is set to contribute up to $30 billion, while other investors, including Microsoft, will cover the rest.
The transition requires approval from OpenAI's largest shareholder, Microsoft, and a review by the California attorney general.
Any delays or failure to complete the shift could severely hinder ChatGPT-maker's ability to secure funding.
Restructuring hurdles
A complex and accelerated challenge
The deadline from SoftBank speeds up OpenAI's already difficult transition process.
Earlier, the company had a two-year period from its last financing round with investors for the transformation.
The move to a for-profit model is considered critical by OpenAI to raise the capital needed for developing sophisticated AI models and supporting expansive projects like the Stargate data center initiative.