Top 10 huge capital investments in AI.
Marco van Hurne
I build AI companies | Data Science Strategy | Data Governance | Certified AI Compliance Officer | The Future Group | Beyond the Cloud | Author of the Machine Learning Book of Knowledge
AI fatigue? It's real for most of us.
And after the Nasdaq buble deflated 2 Trillion USD (Sunday's article), VC's are even more afraid to poor billions into the AI bigguns.
Let that sink in for a while....2 Trillion.
That is 2.000 x 1.000 x 1000 x 1000 bucks
But until last week, the investments were soaring sky-high.
In just the first seven months of 2024, a staggering $35.5 billion was poured into AI startups. Let's put that in perspective. That's about 93% of Estonia's GDP in 2022. Or 26% of Bill Gates' net worth in 2024.
So, the big question: will these AI new ventures pay off? Or are they simply overhyped as their big brothers from Meta, NVIDIA, Google, Tesla - the magnificent seven?
Recently Crunchbase found something interesting.
Five of the six venture rounds of more than $1 billion raised in the first half of 2024 were led by AI companies. And many other AI startups managed to raise mega-rounds of more than $100 million. U.S. startups raised two of the billion-dollar rounds in the first half of this year. They also raised nearly two-thirds, or 64%, of the mega-rounds.
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Let's talk about startup stages first:
Here are a few U.S.-based AI companies >$100 million in 2024
№10: EvolutionaryScale — $142 million
First up, New York-based EvolutionaryScale. They're developing biological AI models for therapeutic design. They raised a $142 million seed round. $142 million! That tells me that there is a growing interest in combining biology with AI. They want to create groundbreaking innovations in healthcare and beyond. Whey they are at position 10, I don't know. This stuff means better drug design, people. Maybe investors can relate better to the concept of a chatbot then a drug designer tool.
№9: Cognition — $175 million
Next, at number 9, there is Cognition. They are an applied AI lab startup. They raised $175 million. The company was founded in November 2023. And get this, they are already valued at nearly $2 billion. Details about the company are scarce, but their substantial backing indicates significant potential in their AI advancements.
№8: Skild AI — $300 million
At number 8, there is Skild AI. They focus on robotics. They've raised $300 million. Their aim? To revolutionize the robotics industry with advanced AI capabilities.
№7: Lambda — $320 million
Number 7 on the list is Lambda. They specialize in deep learning infrastructure. With $320 million in funding, they are positioned to improve (whatever that means) the tools and platforms that power AI research and applications.
№6: AlphaSense — $650 million
Moving on to number 6: AlphaSense. They're a market intelligence platform. They raised $650 million. By the name, you can tell they focus on providing critical insights and analytics to businesses. They help them make informed decisions. Think of it as the AdSense of the AI world, but for market intelligence. Kinda neat, but to cough up 2/3 of a billion sounds a bit too much, but hey, I am no capitalist.
№5: Figure — $675 million
At number 5 is Figure. They're an AGI robotics company powered by OpenAI. They raised $675 million. Their technology is backed by giants like OpenAI, Microsoft, and NVIDIA. Their goal? To create advanced general intelligence in robotics. They're pushing the boundaries of what's possible. Well, Sam Altman has billions to fool around with and AGI is his wet dream, so let him fiddle with a sentient robot in his dreams for nearly 3/4 of a billion US.
Here's the billion dollar club
Now, things get even crazier. The next few companies have raised over a billion dollars each!
№4: Xaira Therapeutics — $1 billion
At number 4, there is Xaira Therapeutics. They focus on therapeutic AI. They hussled $1 billion to develop AI-driven solutions that can transform the medical field. From drug discovery to personalized treatment plans, they're on it. That to me says: worth it!
№3: Scale AI — $1 billion
Number 3 is Scale AI. They are apparently into AI labeling services. You know, data labeling and stuff..A huge thing. And a huge price tag. They also raised $1 billion. Their technology is crucial for training AI models. They provide high-quality labeled data to improve accuracy and performance. Worth it as well ! Improve the quality overall of the data the models are trained with.
№2: CoreWeave — $1.1 billion
At number 2, you got CoreWeave. They specialize in GPU infrastructure. The stuff that computes. They raised $1.1 billion. This shows that there is a growing demand for powerful computing resources to support AI research and deployment. Duhhh. I don't know. We have CPU, GPU, LPU, TPU, Grok...
I know, I know! Your question must be: So, who takes the top spot?
№1: xAI by Elon Musk — $6 billion
DUHHHHHH...
The number 1 spot goes to xAI, founded by none other than Elon Musk. They raised a jaw-dropping $6 billion.
xAI wants to build an AI platform that will "accelerate human scientific discovery". Given Musk's track record, the hype is understandable. But, let's hope this venture doesn't turn into another X, the everything app Musk has been teasing.
Credits : About Elon Musk and his love towards humanity
Why is there so much cash thrown at AI?
You might wonder why investors are pouring so much money into AI.
Let me try break it down a bit.
Since 2023, America has been pouring nearly $250 billion into 4,643 AI ventures. So, we're talking about serious profit possibilities here. The big question is, is putting money into AI startups worth it? Well, the numbers suggest a big potential payoff! Generative AI revenue from 14 billion U.S. dollars in 2020 to nearly 900 billion U.S. dollars in 2023, and is expected to rise significantly with a forecast for more than 1.3 trillion U.S. dollars in 2032. The AI landscape is evolving at a rapid pace. The future looks incredibly promising.
In a striking revelation, the AI market size in 2030 is projected to be approximately eight times larger than it was in 2023.
Potential for Disruption: AI has the potential to disrupt virtually every industry. From healthcare to finance to transportation, AI technologies can streamline processes, reduce costs, and create new opportunities.
Scalability: AI solutions, once developed, can be scaled rapidly. This scalability means that successful AI startups can grow exponentially, providing significant returns on investment.
Technological Advancements: Recent advancements in machine learning, deep learning, and neural networks have made AI more powerful and versatile. This progress fuels investor confidence that AI can solve complex problems.
Strategic Importance: For tech giants and governments, leading in AI is strategically important. It can provide a competitive edge in various sectors, from defense to economic development.
Are AI Ventures Overhyped?
Given these massive investments, it's natural to ask: Are AI ventures overhyped? Let's consider a few points.
Market Realities: While AI holds tremendous promise, not all AI startups will succeed. Many may fail to deliver on their promises, leading to significant losses for investors. However, this is a common risk in venture capital. The few successful ventures often compensate for numerous failures.
Hype vs. Substance: The AI field is filled with buzzwords and lofty claims. It's crucial to differentiate between genuine innovation and marketing hype. Investors must conduct thorough due diligence. They need to identify startups with real potential and avoid those merely riding the AI wave.
So, are AI ventures overhyped? To me: the answer is both yes and no. The hype is justified, and the reaction of the Nasdaq was to be expected. I think that there is even more air in the bubble than should be, so a second deflation would be a good thing.
Yet AI is here to stay. AI's pretty much the real deal in the tech industry. It has great transformative potential. However, it's essential to approach AI investments with a critical eye. We need to separate genuine innovation from empty promises when it comes to jumping into an AI venture. With empty promises I mean all those "shell companies" that build a layer on top of GPT4 and brand themselves as the next evolution of ChatGPT or whatever. Those companies are doomed to fail.
The future of AI ventures
Looking ahead, the future of AI ventures is promising and of course challenging. Personally, I would like to share insights about some of the most popular trends in this area:
AI Regulation: Governments worldwide are drafting regulations to govern AI development and deployment. These regulations could impact how startups operate and scale. (read my article on worldwide AI regulation)
AI in Everyday Life: Expect to see AI integrated into more everyday applications, from smart home devices to personal assistants. The convenience and efficiency AI offers will drive its adoption across various domains. (read my article "we don't want your chatbots")
Collaborative AI: Collaborative AI systems, where AI works alongside humans to augment their capabilities, will become more prevalent. This synergy can enhance productivity and creativity in the workplace. (read my dozens of articles on AI Assistents).
AI Democratization: Efforts to democratize AI, making it accessible to smaller companies and individual developers, will continue. Open-source AI frameworks and affordable computing resources will play a crucial role.
Sustainable AI: Sustainability will be a key focus. Developing energy-efficient AI models and minimizing the environmental impact of AI operations will gain importance.
Also responsible AI and security & privacy are important aspects. So I hope Investors, entrepreneurs, and developers could work together to harness AI's power responsibly. By doing so, they can create technologies that not only drive economic growth but also make a positive impact on the world.
Well, that's a wrap for today. Tomorrow, I'll have a fresh episode of TechTonic Shifts for you. If you enjoy my writing and want to support my work, feel free to buy me a coffee ♨️
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Signing off - Marco
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3moGreat post Marco. Thank you.