BLOOMBERG — Multibillion-dollar investments in artificial intelligence startups have become almost commonplace in Silicon Valley: Dollars raised for AI companies exceeded funding for all other technology categories, reaching $17.9 billion in the third quarter.
Collected as per Pitchbook data BloombergThe value of funding for AI companies globally increased by 27% in the third quarter from a year earlier. This is despite the fact that global deals for startups fell by 31% compared to the previous year, reaching USD 73 billion globally.
The opposing trend lines highlight the divide between AI startups and the rest of the industry. Rising interest rates and the post-pandemic downturn have affected venture capital funding, making AI the only bright spot in the venture capital world. In particular, So-called generative AI technology has dazzled users and investors with its ability to create photo-realistic images and human-sounding text. Answer a few words, and bring billions in funding to the biggest companies.
Some venture capitalists have compared the rise of AI to the advent of the consumer Internet. Praveen Akgraju of Insight Partners said, “The web moment is the HTML moment for creative AI. Just as the web was for years before easy-to-use interfaces made it mainstream, AI is growing as easy-to-use programs like OpenAI’s ChatGPT gain traction.”
The excitement masked a major technical collapse. While companies like OpenAI dominated the headlines, most technology segments, including IT, healthcare and consumer products, were down compared to the same quarter a year ago, according to Pitchbook.
Even AI isn’t completely immune to startup pressures. At the peak of pandemic technology development, total fundraising for the sector is lower than it was two years ago. And Its success was largely fueled by large deals from some notable companies such as Anthropic and OpenAI.
The scope of the AI hype has resulted in a wait-and-see attitude in other sectors. Enterprise software, for example, was a growing category a few years ago. During those boom times, UiPath Inc. And thanks to the successful initial public offerings of companies like Snowflake Inc, venture capitalists were excited about enterprise software.
One of the startups benefiting from the 2021 hype is Kong Inc, which helps manage the ways software applications communicate with each other. The deal raised $100 million at a $1.4 billion valuation led by Tiger Global Management, with participation from Goldman Sachs Group Inc, Index Ventures and CRV, among others.
According to its founder Augusto Marietti, Kong has continued to perform well in recent months with more money coming into the company than leaving it. Your business is growing thanks to the development of AI, because more AI means more data infrastructure, which increases the demand for your product. Even so, the focus on pure AI companies cannot be ignored.
Last earnings season, Merritt grew tired of hearing the company mention AI at every opportunity. Apple Inc. He was comforted by the earnings release, which distinguished itself by not mentioning him, and Apple’s stock soared despite it.
Marietti said Kong is integrating AI capabilities, but it won’t become an AI company. It also doesn’t mean it can’t continue to grow and become more profitable.
“We don’t need an identity crisis,” he said. “Go on.”
Read more at Bloomberg.com