We’re Seeing An AI Investment Gold Rush

The flood of money into AI just isn’t stopping.

Investors, institutions, and individuals alike are drooling over what they see as a once-in-a-lifetime AI opportunity. Just this past week marked the largest AI fundraising since Microsoft poured $10 billion into OpenAI last January. And it’s not just the ChatGPTs of the world bagging checks; it’s the entire spectrum of AI companies — from enterprise to consumer to B2B.

Unfortunately, not a lot of that cash is going to media startups. In fact, it looks like most of the money is heading to infrastructure so we can all have more AI, all the time.

More on what that means in a second. First, let’s pay a bill…

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For example, CoreWeave raised $7.5 billion in debt to rent more AI chips from Nvidia in a deal led by Blackstone. This massive investment highlights the critical importance of infrastructure in the AI ecosystem. The backbone of AI applications, from data centers to cloud computing, is attracting enormous capital as companies race to build the necessary hardware to support AI advancements. Here’s a quick rundown via the Neuron:

Scale AI, which helps companies organize and label their data to enhance AI model performance, just secured a cool billion dollars.

PolyAI, a builder of AI voice assistants for call centers, secured $50 million.

Grasp AI, an AI assistant for investment bankers and consultants, raised $2 million.

Suno, an AI music generator that allows anyone to make music, announced $125 million in funding.

Gamma, an AI presentation helper that turns documents and outlines into presentation drafts, raised $12 million.

A French company called “H” with just 40 words on its website raised a $220 million seed round to build AGI (Artificial General Intelligence).

So yeah, we are absolutely in a bubble. What that means at this point in the game, however, is the biggest question.

All this money is flowing to startups that are solving small problems — presentations and music are definitely not vital to the global interest. Further, the hype cycle is high right now and H, that French startup, is a definitive example of that. The sheer volume of investment in AI across various sectors highlights the widespread belief in AI’s transformative potential. It also highlights a lack of focus in VC, with everything under the sun getting millions in funding.

Our take? AI is vital, it needs investment, but it will be messy when all of these GPT facades end up failing. Like the Dot Com days, the ones who survive will be behemoths. Until then, we’re going to see a lot of pipsqueaks with way too much cash.

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