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OpenAI LP: Capped-Profit Structure Announcement
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High(4)High quality. Established institution or organization with editorial oversight and accountability.
Rating inherited from publication venue: OpenAI
This 2019 announcement describes OpenAI's unusual corporate structure and is relevant to discussions of AI governance, organizational incentives, and whether commercial pressures can be balanced with safety-focused missions.
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Importance: 55/100blog postprimary source
Summary
OpenAI announces the creation of OpenAI LP, a 'capped-profit' company structure designed to attract investment and talent while maintaining its nonprofit mission. The structure caps investor returns at 100x and ensures the nonprofit board retains control over strategic decisions. This model was intended to balance commercial sustainability with the goal of developing safe and beneficial AGI.
Key Points
- •OpenAI transitions to a 'capped-profit' LP structure, limiting investor returns to 100x to balance commercial and safety goals.
- •The OpenAI nonprofit retains governance control, ensuring mission alignment even as the company raises external capital.
- •The structure was designed to attract the large-scale compute and talent needed for frontier AI research.
- •Employees and investors participate in upside, but excess returns flow back to the nonprofit mission.
- •Framed as a novel governance experiment to fund AGI development responsibly without pure profit maximization.
Cited by 1 page
| Page | Type | Quality |
|---|---|---|
| OpenAI | Organization | 62.0 |
2 FactBase facts citing this source
| Entity | Property | Value | As Of |
|---|---|---|---|
| OpenAI | Legal Structure | Capped-profit LLC | Mar 2019 |
| OpenAI | Legal Structure | Public Benefit Corporation (converting) | 2025 |
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OpenAI
March 11, 2019
[Company](https://openai.com/news/company-announcements/)
# OpenAI LP
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Our mission is to ensure that artificial general intelligence (AGI) benefits all of humanity, primarily by attempting to build safe AGI and share the benefits with the world.
We’ve [experienced](https://openai.com/index/openai-five/) [firsthand](https://openai.com/index/better-language-models/) that the most dramatic AI systems use the most [computational power](https://openai.com/index/ai-and-compute/) in addition to algorithmic innovations, and decided to scale much faster than we’d planned when starting OpenAI. We’ll need to invest billions of dollars in upcoming years into large-scale cloud compute, attracting and retaining talented people, and building AI supercomputers.
We want to increase our ability to raise capital while still serving our mission, and no pre-existing legal structure we know of strikes the right balance. Our solution is to create OpenAI LP as a hybrid of a for-profit and nonprofit—which we are calling a “capped-profit” company.
The fundamental idea of OpenAI LP is that investors and employees can get a capped return if we succeed at our mission, which allows us to raise investment capital and attract employees with startup-like equity. But any returns beyond that amount—and if we are successful, we expect to generate orders of magnitude more value than we’d owe to people who invest in or work at OpenAI LP—are owned by the original OpenAI Nonprofit entity.
Going forward (in this post and elsewhere), “OpenAI” refers to OpenAI LP (which now employs most of our staff), and the original entity is referred to as “OpenAI Nonprofit.”
## The mission comes first
We’ve designed OpenAI LP to put our overall mission—ensuring the creation and adoption of safe and beneficial AGI—ahead of generating returns for investors.
The mission comes first even with respect to OpenAI LP’s structure. While we are hopeful that what we describe below will work until our mission is complete, we may update our implementation as the world changes. Regardless of how the world evolves, we are committed—legally and personally—to our mission.
OpenAI LP’s primary fiduciary obligation is to advance the aims of the [OpenAI Charter](https://openai.com/charter/), and the company is controlled by OpenAI Nonprofit’s board. All investors and employees sign agreements that OpenAI LP’s obligation to the Charter always comes first, even at the expense of some or all of their financial stake.
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