Investors reportedly concerned they could lose hundreds of millions of dollars they invested in the tech startup.Some investors in OpenAI, the creator of ChatGPT, are exploring legal recourse against the company’s board, sources familiar with the matter have told the Reuters news agency, after the directors removed CEO Sam Altman and sparked a potential mass exodus of employees.
Sources said investors are working with legal advisers to study their options. It was not immediately clear if these investors will sue OpenAI.
Investors worry they could lose hundreds of millions of dollars they invested in OpenAI, a crown jewel in some of their portfolios, with the potential collapse of the hottest startup in the rapidly growing generative AI sector.
OpenAI did not respond to a request for comment.
Microsoft owns 49 percent of the for-profit operating company, according to sources familiar with the matter. Other investors and employees control 49 percent, with 2 percent owned by OpenAI’s nonprofit parent, according to Semafor.
OpenAI’s board fired Altman on Friday after a “breakdown of communications”, according to an internal memo seen by Reuters.
By Monday, most of OpenAI’s more than 700 employees threatened to resign unless the company replaced the board.
Venture capital investors usually hold board seats or voting power in their portfolio companies but OpenAI is controlled by its nonprofit parent company OpenAI Nonprofit, which according to OpenAI’s website was created to benefit “humanity, not OpenAI investors”.
As a result, employees have more leverage in pressuring the board than the venture capitalists who helped fund the company, said Minor Myers, a law professor at the University of Connecticut.
“There is nobody exactly who is in the seat of an injured investor,” he said.