OpenAI's next step: Consider going public via IPO

Catch up quick: The ChatGPT maker promised investors that it will convert into a for-profit entity — reflecting its transition from a research lab into a product-focused business — even pledging to return capital if the structural change isn't completed within two years.

• It also secured a $4 billion revolving credit line.

The big picture: The stunning reality is that this new money won't get OpenAI where it wants to go, as Axios' Scott Rosenberg explains.

• Sam Altman & Co. certainly could return to the private markets, given that the new round was oversubscribed, but there's much deeper liquidity in the public markets.
• Particularly given that OpenAI doesn't want investors that also back its top competitors.
• Plus, OpenAI now has a new CFO in Sarah Friar who previously led a listed company (NextDoor) and who effectively led another (Square/Block).

Zoom out: Going public is all about being able to tell a story, and this one almost writes itself.

• ChatGPT is almost becoming consumer shorthand for AI, and there is an argument that it could eventually become a multi-trillion dollar business (which is why VC backers in this round think they could get VC-level return multiples).

• It's a lottery ticket on a rocket ship, particularly for retail investors who missed out (or were too young) to bet on Amazon or Google in their early days.

The bottom line: OpenAI must eventually go public if it's to fulfill its promise. It will need the cash, and its venture backers won't have other viable exit options.

• Doing it sooner rather than later, even if it requires an uncomfortable level of disclosure, is a show of strength that would lengthen its competitive advantage.