4% of AI Startups Prioritize Social Interests in Corporate Structure

OpenAI, Anthropic and Elon Musk’s xAI have drawn attention for their unconventional governance structures, ones that prioritize public interest over obligations to shareholders. But these companies are the outliers, The Information’s analysis shows, as most AI developers opt for traditional approaches that appeal to investors. 

Only 4 of the 96 U.S.-incorporated startups in The Information’s Generative AI Database have adopted the structure of either a nonprofit or for-profit benefit corporation, which allows businesses to pursue social goals. The reason, says one lawyer, is simple: the need for startups to raise money easily.

“For most startups trying to raise money, they don’t want to add additional complexity,” said Andrew Harper, a partner at corporate law firm Sidley Austin. “[These structures] create friction for investors looking to invest in their companies.”