OpenAI's recent governance structure change has removed the company's chief executive officer, Sam Altman from owning the AI giant's venture capital fund that backs AI startups, as reported by Reuters.
Documented in an SEC filing dated March 29, the change was made in response to criticism of Altman's ownership of the OpenAI Startup Fund due to its unique structure.
(Photo: Kent Nishimura/Getty Images) OpenAI Chief Executive Officer Sam Altman walks on the House side of the U.S. Capitol on January 11, 2024, in Washington, DC.
Although the fund was marketed as a corporate venture arm, it was established by Altman from outside limited partners, and he was the one who made investment decisions. Despite being the owner, Altman does not have a financial stake in the fund, according to OpenAI.
Now in charge is Ian Hathaway, who has assisted with fund management since the fund's inception in 2021. Hathaway has been in charge of the fund's accelerator program and has spearheaded investments in businesses like Ambience Healthcare, Harvey, Cursor, and Speak.
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OpenAI Startup Fund
OpenAI is reportedly not an investor in the $175 million that the OpenAI Startup Fund has raised from OpenAI partners like Microsoft. Former president of Y Combinator, Altman has been under fire in the past for his extensive outside interests in investments, ranging from fusion business Helion Energy to cryptocurrency startup Worldcoin, as well as his fundraising operations in the Middle East.
According to an SEC filing, the fund reportedly now has $325 million in gross net asset value, including $175 million in commitments last year. Microsoft and additional outside backers were among the investors. The organization makes investments in early-stage AI-driven businesses in industries including education, law, and healthcare.
PitchBook data shows that at least 16 other firms have received funding from the Startup Fund. Among them are software developer Ghost Autonomy and collaborative editing platform Descript, which was valued at $553 million in the previous year.
Initially established in 2021, the OpenAI Startup fund allows its partners to invest in select early-stage AI businesses that are addressing significant issues. Previously, the startup fund was reserved for AI companies addressing pressing problems in healthcare, education, and the environment. In addition to the OpenAI mission statement, the companies should be where AI-powered applications or methodologies could possibly benefit all of humanity.
OpenAI's Legal Battles
OpenAI, on the other hand, continues to be in a legal battle in a different font as co-founder of OpenAI and tech giant Elon Musk has sued the company and CEO Sam Altman, claiming that they have strayed from their initial charitable goals.
Musk argues that OpenAI's $13 billion partnership with Microsoft and the company's current generative AI products' confidentiality go against the company's core values.
The lawsuit, which was submitted to a state court in California, claims that Altman and co-founder Greg Brockman violated a contract and demanded a jury trial in addition to payment of earnings.
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