Dive Brief:
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So, get this. The number of venture capital deals involving generative artificial intelligence went down by a whopping 27% in the third quarter. Yeah, that’s right. Research firm Pitchbook says that after all those big tech companies made huge investments earlier this year, the VC deals took a hit. But wait, there’s more. The data provided by Pitchbook shows that the total deal volume went from 146 funding rounds down to 107 in Q3. However, the aggregate deal value actually increased by about 39% to a mind-blowing $6.1 billion. And you’ll never guess what’s behind that increase. Amazon dropped a cool $4 billion on a San Francisco-based AI startup called Anthropic. Talk about putting your money where your mouth is!
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But don’t worry, folks. This is just a minor setback. Brendan Burke, who happens to be a senior emerging tech analyst at Pitchbook, thinks that interest in AI will stay strong and that funding rounds will continue to happen. He said, and I quote, “I consider interest to remain high and expect funding rounds to continue to get done, but a lot of that was front-loaded into Q1 and Q2 of this year, and some of the leaders in this space are now well capitalized.” You gotta love those well-capitalized leaders, am I right?
Dive Insight:
Alright, listen up. According to a report from KPMG, after Microsoft-backed startup OpenAI introduced ChatGPT in late 2022, investors went absolutely wild for AI. Like, seriously wild. The report says, and I quote, “AI has quickly become a target sector for VC investors who are looking for their next home run or experiencing the fear-of-missing-out (FOMO), in part because of the multiplier effect that AI offerings could have in driving widespread disruption across industries.” It’s like everyone’s trying to jump on the AI bandwagon!
Now here’s some juicy info for ya. In January, Microsoft announced a multi-billion-dollar investment deal with OpenAI. Yeah, that’s right, billions of dollars! And it doesn’t stop there. Google, being the big player that it is, joined the party and invested $300 million in Anthropic for a 10% stake in the company. And get this, Google was just one of the lead investors in a funding round that raised $450 million for Anthropic. I can’t even wrap my head around those numbers!
But wait, there’s more AI madness. Microsoft and NVIDIA led a funding round that raised a staggering $1.3 billion for Inflection AI. Now that’s some serious cash! It’s safe to say that AI is making it rain, folks!
And get a load of this. S&P Global Market Intelligence predicts that revenues of generative AI offerings are gonna hit $3.7 billion this year, and by 2028, it’ll expand to a mind-blowing $36 billion. Now that’s what I call exponential growth, baby!
AI is such a hot topic that Business Insider reported that AI-related terms were mentioned a whopping 7,358 times in the earnings calls of S&P 500 companies during the second quarter. That’s a 4.6 increase compared to the previous quarter. Looks like everybody’s got AI on the brain!
But hold on a second. Not everything is going smoothly in the AI world. The Wall Street Journal reported in August that the initial hype might be dying down a bit. Apparently, monthly online visitors to ChatGPT actually decreased by 10% in both June and July. And Jasper, a generative AI writing tool, saw declining user growth for four months straight. They even had to do some layoffs. Ouch! It just goes to show that even the hottest trends can cool off sometimes.
