On March 11, 2019, OpenAI announced a new structure it called OpenAI LP, a “capped-profit” company sitting underneath the original OpenAI nonprofit. The stated reason was money: OpenAI said it needed to invest billions of dollars in cloud compute, talent, and AI supercomputers, and wanted to raise capital while still serving its mission. The mechanism was a cap on investor returns. OpenAI said returns for its first round of investors were capped at 100 times their investment, that it expected this multiple to be lower for future rounds, and that any returns beyond the cap would be owned by the original OpenAI Nonprofit.
Four months later the capital arrived. On July 22, 2019, Microsoft announced a 1 billion dollar investment and an exclusive computing partnership. In Microsoft’s own words, the two companies “will jointly build new Azure AI supercomputing technologies,” OpenAI “will port its services to run on Microsoft Azure,” and “Microsoft will become OpenAI’s preferred partner for commercializing new AI technologies.” Microsoft CEO Satya Nadella framed the goal as “to democratize AI - while always keeping AI safety front and center - so everyone can benefit.” OpenAI CEO Sam Altman called the creation of AGI “the most important technological development in human history.”
This pairing - a capped-profit entity that can raise large sums, tied to a big-tech cloud provider that supplies compute in exchange for a commercial position - became the template for how frontier AI gets financed. The arrangement deepened in later years, but its essential shape was set here in 2019.
Note on sourcing: OpenAI’s own pages return an HTTP 403 error to automated fetchers, so the OpenAI LP details (date, the 100x cap, and the nonprofit owning excess returns) were corroborated through search against the canonical openai.com/index/openai-lp/ post rather than fetched directly. Microsoft’s own announcement was fetched and verified live.