ChatGPT maker OpenAI is reportedly shifting from its nonprofit structure to a more traditional for-profit approach. Torch Capital founder and managing partner Jon Keidan sits down with Asking for a Trend Host, Josh Lipton, to explain why the company may be making this change now and check in on competition within the artificial intelligence (AI) space.

Keidan tells Yahoo Finance, “As the competition has gotten more severe, OpenAI has shown a lot of success. They've developed product after product released successfully, and I think they're just trying to equalize the playing field. I think they probably felt being a nonprofit was a bit of a weight on them, so they're restructuring to be more competitive with Anthropic or xAI.” The for-profit shift would likely mean the OpenAI CEO Sam Altman would have equity in the company.

As far as investing in an AI winner, Keidan says, “We're just still early. And so it's very hard to see what are the competitive advantages and what are going to be the key things that make the winners. And so from that perspective, OpenAI is doing a phenomenal job, but it still remains to be seen across the board. And with Microsoft (MSFT) and Google having other bases of operations that they can play from, [it could] potentially be a challenge.”

Keidan says that, as a venture investor, he’s probably more excited about AI than he was a year ago. “The capabilities and the adoption are through the roof, and it's going to absolutely be a moment much like in the 2010s when we saw mobile, social, cloud, and location converge. And that created the DoorDashes (DASH) and Ubers (UBER) and Airbnbs (ABNB).”

“The potential is tremendous. I'm more excited than ever. In terms of where it's being hashed out now with these huge companies, infrastructure very early in the curve,” but Keidan says “We're trying to stay out of that, and we're really looking for the commercial application layers, early stage investors and I still think it's early. And on the consumer side, it hasn't been proven out yet, but it will be.” He adds that AI is already improving efficiency within Torch Capital’s start-ups.

Keidan notes that he doesn’t expect to see private AI companies announcing initial public offerings anytime soon. “These companies have raised a lot of money. They don't want to be distracted by an IPO. And they're building, and they're growing. I think they're going to sit out another year or maybe two until the markets are wide open. Why create friction when they don't need to?”

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This post was written by Naomi Buchanan.