In May, CoreWeave, a provider of cloud computing services for AI companies, raised $1.1 billion, followed by $7.5 billion in debt valued at $19 billion. Scale AI, a data provider for AI companies, has raised $1 billion, valuing it at $13.8 billion. And xAI, founded by Elon Musk, raised $6 billion, valuing it at $24 billion.
Such funding rounds have increased overall industry deals by dollar amount and number of deals, said Kyle Stanford, research analyst at PitchBook.
“It’s no longer declining,” he said. “The bottom has already fallen out.”
The activity has caused some venture capital investors to change their messaging. Last year, Tom Loverro, an investor at IVP, predicted a “mass extinction” for startups and encouraged them to cut costs. Last week he declared that era over, this time dubbing it the “Great Reawakening” and encouraging companies to “put the pedal to the metal for growth,” particularly in artificial intelligence.
“The AI train is leaving the station and you have to be there,” he wrote on X.
The startup downturn began in early 2022 as many loss-making companies struggled to grow as quickly as they did during the pandemic. Rising interest rates also prompted investors to chase less risky assets. To compensate for dwindling funding, start-ups cut staff and scaled back their ambitions.
At the end of 2022, OpenAI, an AI lab in San Francisco, sparked a new boom with the release of its ChatGPT chatbot. The enthusiasm for generative AI technology that can produce text, images and videos sparked an uproar in the creation and funding of start-ups.
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2024-07-03 16:20:54
www.nytimes.com
