Amazon, Microsoft, and Google emerged as the major contributors, accounting for approximately two-thirds of the total investment, a colossal $18 billion.
Technology behemoths Amazon.com Inc., Microsoft Corp., and Google LLC have outpaced traditional venture capital firms in significant investments in generative artificial intelligence (AI) startups throughout the year, according to recent research from PitchBook Inc., as reported by the Financial Times.
PitchBook’s findings indicate that generative AI startups collectively raised a staggering $27 billion from investors in 2023, marking a substantial surge in interest and funding for this burgeoning sector. Amazon, Microsoft, and Google emerged as the major contributors, accounting for approximately two-thirds of the total investment, a colossal $18 billion.
The largest deal in the generative AI landscape for 2023 unfolded when Microsoft committed a substantial $10 billion investment in OpenAI. Semafor, a source close to the matter, revealed that a significant portion of this investment will come in the form of Azure cloud credits. Microsoft is anticipated to receive 75% of OpenAI’s profits until recovering the investment, after which it is slated to secure a 49% stake in the prominent AI developer.
Following OpenAI, Anthropic PBC, a generative AI company offering the expansive language model Claude-2, clinched the second-highest capital infusion. In September, Amazon invested a noteworthy sum of up to $4 billion in Anthropic, and a few weeks later, Google added another funding round, injecting up to $2 billion into the innovative AI firm.
In addition to the tech giants Amazon, Microsoft, and Google, Nvidia Corp. emerged as a significant player in the generative AI investment landscape for 2023. DealBook estimates that the chipmaker participated in 35 funding rounds this year, a sixfold increase from 2022, positioning Nvidia as the “most active large-scale investor in AI” excluding accelerator funds.
While OpenAI and Anthropic absorbed a substantial portion of the generative AI startup funding, other ventures also garnered attention. Earlier this month, language model provider Mistral closed a noteworthy $415 million funding round led by Andreessen Horowitz and Lightspeed Venture Partners. AI21 Labs Ltd., a rival, secured $115 million from a consortium that included Nvidia, Google, and several other investors.
Despite the robust financial support for generative AI startups, PitchBook noted a slight slowdown in venture activity during the third quarter. The number of funding rounds for generative AI startups decreased by 29% compared to the previous quarter. However, the cumulative dollar value of these rounds surged, attributed in part to the up to $4 billion investment that Anthropic secured from Amazon in September.
Looking ahead, the generative AI market’s major players are poised to attract even more funding in 2024. Recent reports suggest that OpenAI is in talks to secure new capital at a valuation surpassing $100 billion. Meanwhile, Anthropic is reportedly seeking a $750 million investment, valuing the company at an impressive $15 billion.
As technology continues to evolve, the unprecedented investments in generative AI underscore the growing importance of artificial intelligence and its potential to reshape industries across the board. With tech giants leading the charge, the future of generative AI appears to be teeming with innovation and substantial financial backing.