More VC than VC, this wave of AI startups has driven Silicon Valley giants crazy with investments.

Large tech companies are betting more on generative AI startups than VCs.

According to the latest data from private market research firm PitchBook, Microsoft, Alphabet-C, and Amazon made a series of significant investments in the generative AI field last year, totaling around $27 billion, accounting for two-thirds of the total financing for emerging AI companies.

Since the launch of ChatGPT in November 2022, investments in the generative AI field have exploded, but VC (venture capital) firms have fallen behind compared to large tech companies in Silicon Valley. VCs have been forced to slow down spending to adapt to rising interest rates and declining valuations of portfolio companies.

Nina Achadjian, a partner at US venture capital firm Index Ventures, mentioned some top AI startups:

"In the past year, we have seen the market rapidly consolidate around a few foundational models, with large tech companies entering the scene and investing billions of dollars in companies like OpenAI, Cohere, Anthropic, and Mistral.

For traditional VCs, you have to get in early, you have to understand the latest AI research, and you have to know which teams are spinning out of companies like Alphabet-C DeepMind and Meta."

Advantages of large tech companies

Building and training generative AI tools is an intensive process that requires significant computing power and funding. Large tech companies can provide cloud infrastructure, the most powerful chips, and funding, so AI startups are more willing to collaborate with them.

With the involvement of large tech companies, the valuations of emerging AI startups have been rapidly pushed up, making it more difficult for VCs to get in.

OpenAI is a good example. Wallstreetcn previously mentioned that OpenAI is in preliminary discussions for a new round of financing, and the company's valuation may reach or exceed $100 billion as a result of this financing. The details of this financing, including terms, valuation, and timing, have not been finalized and are subject to change.

If the above financing news is accurate and OpenAI's valuation does reach $100 billion after the financing is completed, according to data from enterprise analysis platform CBInsights, OpenAI will become the second-highest valued startup in the United States, second only to SpaceX under Elon Musk.

A valuation of $100 billion also means that OpenAI's market valuation has multiplied several times in just one year. At the beginning of this year, when Microsoft committed to invest $10 billion in OpenAI, the company's valuation was $29 billion.