Bloomberg News reports that investing multibillion dollars in the artificial intelligence industry has become commonplace. However, it is being seen that the dollars raised from the companies dealing with artificial intelligence have outweighed the other tech categories, thereby reaching a whopping $17.9 billion in the third quarter.
Outlook of Investment in AI startups
As per reports from PitchBook data, the value recorded for financing the companies engaged in artificial intelligence soared to 27% globally as of the third quarter. This is compared to what the figure was just a year ago. This is even since the deals overall for the startups dropped by 31% compared to one year earlier and has hit the mark of $73 billion globally.
The trends that are being manifested highlight that there is a divide between the rest of the tech sector and the artificial intelligence startups.
Reasons for Sluggish Venture Capitalist Funding
Surging interest rates and a slump resulting from post-pandemic activities adversely impacted venture capitalist funding. This has led to the lone bright spots in venture capitalism. The so-called generative AI technology has appealed to users and investors since it can generate photo-realistic pictures aside from human-sounding text as a response to typing in just a few words. This has prompted funding from billions for a few of the largest companies in this arena.
Overshadowing the Tech Slump
The excitement prevailing in the artificial intelligence sector overshadows the slump that is being manifested in the tech sector. It has been observed that OpenAI companies have been dominating the scenario. But tech companies comprising services related to hardware, consumer goods, and healthcare have dropped. This is in sharp contrast to what it was during the same period just a year ago.
Bloomberg News reports that although artificial intelligence has caused a great furor in the tech world, it is not immune to the pressure of startups. The total fundraised is still lower than just two years back at the time of the pandemic boom in the tech segment. Anthropic and Open AI drive the success of the tech sector deals from standout companies.
Wait-and-See Approach
Enterprise software, for instance, was a hot category even just a few years ago. One of the startups that immensely benefited from the situation is Buzz in 2021. The name of the company is Kong. This business helps in managing the ways to communicate with each other. During the talks, as much as $100 million was raised at a valuation of $1.4 billion during a deal led by Tiger Global Management and others comprising Index Ventures, Goldman Sachs, and CRV.
Kong is doing well and has cash flow coming into business compared to it in recent months. Augusto Marietti revealed the same. His business empire is booming in the era of artificial intelligence. This is because more artificial intelligence indicates greater data infrastructure.
