Big Tech Outpaces VCs in AI Funding - This Week in AI

Welcome to our weekly roundup of the top stories & startups to watch in AI. This week in AI we have stories on:

• Big Tech Investing More in AI than VCs
• New York Times Sues OpenAI for Billions
• Midjourney Releases V6
• AI Startups to Watch

Big Tech Investing More in AI than VCs

As the Financial Times highlights, in 2023, Big Tech companies like Microsoft, Google, and Amazon, have significantly outspent venture capital (VC) firms in AI investments. These tech giants were involved in deals totalling two-thirds of the $27 billion raised by AI startups in 2023.

ChatGPT, Rising Rates, & Falling Valuations

As we all know, this surge in AI investment followed the launch of OpenAI's ChatGPT in November 2022, along with other massively popular AI image generators like Midjourney.

Despite the interest and investment in early stage rounds like Mistral's $113 million seed round led by Redpoint, Index Ventures, and others, VCs have still been outmatched by Big Tech's financial power.

In 2023, VC firms have been adjusting to higher interest rates and many saw valuations in their portfolio fall off a cliff, which undoubtedly led to somewhat reduced spending than we may have seen in previous years.

Major Deals and Investments

Of course, the fact that VCs were out-invested this past year seems quite obvious with the major corporate rounds we saw. Here are a few of the most notable rounds this year:

• OpenAI: Microsoft invested $13 billion in OpenAI, marking it as the largest AI startup round to date...although that will probably get blown out of the water with their next raise.
• Anthropic: This AI startup raised nearly $7 billion in 2023, with a significant investment of up to $4 billion from Amazon​​. Google also invested up to $2 billion in Anthropic​​.
• Inflection AI: Led by Microsoft, Nvidia, and others, Inflection raised $1.3 billion this yearand valued the startup at $4 billion​​.
• Databricks: This data analytics company raised a $685 million round led by T. Rowe Price Associates at a valuation of $43 billion​​.
• Mistral AI: A Paris-based AI startup, raised approximately $487 million at a $2 billion valuation, with major contributions from Andreessen Horowitz, General Catalyst, Lightspeed Venture Partners, Nvidia, and Salesforce​​.

These deals contributed to a nearly threefold increase in funding into AI startups compared to the previous record of $11 billion.

While 2023 was primarily focused on investing in foundational model startups, I have a feeling that will shift more to the application layer in the coming years.

Read the full article

New York Times Sues OpenAI for 'Billions'

The other major headline this week is The New York Times filing a lawsuit against OpenAI and Microsoft, alleging copyright infringement.

• NYT is accusing the companies of using millions of their articles without permission to train its AI models like ChatGPT.
• They claim that the companies have profited massively from copyright infringement and are seeking billions in damages.
• The lawsuit seeks not only compensation but also to establish a legal framework for the use of journalistic content in AI development.

Read the full story

Midjourney Releases V6

Midjourney released a major update this week, most notably with it's improved in-image text capabilities.

Key Features of Midjourney V6

• Enhanced Realism: V6 provides even more realistic and lifelike AI-generatied in AI-generated art.
• Improved Prompt Coherence: The model more accurately follows prompts and handles longer inputs better.
• In-Image Text Capability: Although not perfect year, this allows you to include text within images.

Read the full article

💎 AI Startups to Watch this Week

Each week we track every VC investment deal. Here are a few of our favorite startups to watch this week:

Lightmatter - Raised a $155M Series C Round

• What they do: Lightmatter uses integrated optical technology to create efficient processors and accelerates critical operations in neural networks using an array of programmable photonic elements fabricated alongside transistors in conventional CMOS processes, enabling clients to get quality evaluations as well as low power consumption for software algorithms underlying image recognition and natural language processing.
• Industries: Artificial Intelligence (AI), Hardware, Machine Learning, Semiconductor, Software
• Location: Boston, Massachusetts

Helin - Raised a $3.3M Seed Round

• What they do: Helin provides a SaaS solution that combines edge control with cloud data processing and remote AI applications. The company is reshaping industrial efficiency, safety, and sustainability with its state-of-the-art Industrial Edge Intelligence platform, focusing particularly on the maritime and energy sectors. Helin empowers maritime and energy businesses to enhance the administration of industrial devices on their assets.
• Industries: Artificial Intelligence (AI), Analytics, Cloud Data Services, Internet of Things, Marine Technology, Renewable Energy
• Location: Rijswijk, Zuid-Holland, The Netherlands

Access the full list below:

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