Not everyone is sold on Generative AI’s ROI. But many investors are, based on PitchBook’s latest figures. In Q3 2024, VCs poured $3.9 billion into generative AI startups across 206 deals. This excludes OpenAI’s $6.6 billion round. US-based companies grabbed $2.9 billion across 127 deals. Standouts include Magic ($320 million, August), Glean ($260 million, September), and Hebbia ($130 million, July). China’s Moonshot AI raised $300 million in August, and Japan’s Sakana AI clinched $214 million last month.
Generative AI spans text and image generators, coding assistants, cybersecurity tools, and more. Critics question the tech’s reliability and legality, especially for models trained on copyrighted data without consent. Yet, VCs are betting big on generative AI’s potential in profitable industries, hoping its long-tail growth won’t be hampered by current challenges.
A Forrester report predicts 60% of generative AI skeptics will eventually adopt the tech, knowingly or not, for tasks from summarization to creative problem solving. That’s more optimistic than Gartner’s early-year prediction that 30% of generative AI projects will be abandoned post-proof-of-concept by 2026.
Brendan Burke from PitchBook notes, “Large customers are deploying production systems that leverage startup tools and open source models. The latest wave of models shows potential in scientific fields, data retrieval, and code execution.”
However, the tech’s huge computational needs are a hurdle. Bain analysts foresee generative AI pushing companies to build gigawatt-scale data centers, stressing the labor and electricity supply chain. This demand for power is extending the life of coal plants. Morgan Stanley projects global emissions could triple by 2030 due to generative AI.
Major data center operators like Microsoft, Amazon, Google, and Oracle are investing in nuclear energy to counterbalance their nonrenewable draws. But it may take years for these investments to pay off.
Investments in generative AI startups aren’t slowing down — despite the downsides. ElevenLabs is eyeing a $3 billion valuation, and Black Forest Labs, behind X’s notorious image generator, is in talks for a $100 million round.
It’s very interesting and fearful how the world is changing
It’s very scary when you see 2 steps ahead
VCs are experienced people so they know the future and world follow them!
Good to Reed , VCs don’t care about people they care only money