Published on December 22, 2023, 8:42 am
Generative AI Investment Deals Soar in 2023 with Backing from Major Industry Players
The launch of ChatGPT in November 2022 triggered a surge in generative AI investment, as businesses worldwide sought to leverage the transformative potential of this technology. Throughout the year, AI startups managed to raise an impressive $68.7 billion, highlighting the substantial interest among investors to support emerging players in the field.
Tech giants like Microsoft, Google, and Amazon have also committed significant funding to generative AI startups. Microsoft, in particular, invested billions into OpenAI with the goal of integrating AI tools and applications across its product portfolio.
With such a substantial influx of funding into AI companies over the past 12 months, it has been challenging to keep track. To keep you informed, ITPro has compiled a list of some of the most significant generative AI investment deals that occurred in 2023.
ChatGPT creator OpenAI has become synonymous with the generative AI boom. They have not only inspired numerous copycat tools but also secured impressive funding. Notably, Microsoft’s $10 billion investment in January stands out among their various investors.
Throughout the year, OpenAI raised a total of around $11.3 billion, clearly aiming to maintain their lead over competitors. The close collaboration between Microsoft and OpenAI has raised concerns among regulators who view their relationship as equivalent to a merger. Nonetheless, it is evident that Microsoft sees OpenAI as crucial to its ambition of continuing to lead the generative AI race and differentiate itself from its competitors.
OpenAI tools have been seamlessly integrated throughout Microsoft’s extensive product portfolio – from Copilot support in Windows and Azure to Microsoft 365 – demonstrating that OpenAI is deeply embedded within the tech giant’s offerings.
Databricks, an AI-powered data intelligence platform, has been quietly making strides in the generative AI market with ambitious plans for an innovative data intelligence platform based on AI. The company raised an impressive $500 million in September, bringing its valuation to a staggering $43 billion.
While Databricks may not have received the same level of attention as other industry players, it has been making rapid advancements and even embarked on its own acquisition spree this year. In October, the firm announced its acquisition of enterprise data company Arcion in a deal valued at around $100 million.
Databricks has also been vocal critics of its counterparts in the industry, addressing concerns that major players in the AI sector are overly focused on dominating the market. A senior figure at Databricks stated that OpenAI and other tech giants have “widely overstated” the risks associated with AI in an attempt to establish their dominance.
Emerging as Europe’s response to OpenAI, Mistral secured an impressive $415 million in a Series A funding round that concluded in early December. This investment round significantly boosted the French startup’s valuation to approximately $2 billion.
Following this successful funding round, Mistral AI announced a partnership with Google Cloud. Although non-financial, this collaboration is likely to align Mistral with Google’s future AI plans. Mistral is now among several emerging AI innovators backed by major industry players and will be closely watched as it prepares to compete with US rivals in the coming year.
Inflection AI, the company behind conversational AI chatbot Pi, made headlines when it raised a staggering $1.3 billion during a funding round held in June. Major industry players like Microsoft and Nvidia participated in this funding round, boosting Inflection’s valuation to around $4 billion.
Similar to Databricks, Inflection has quietly been innovating throughout the year without generating as much hype and attention as players like OpenAI. However, they have still managed to make waves. In November, Inflection introduced its flagship large language model (LLM), Inflection 2 – a powerful model that the company claims can outperform most models in the industry, excluding GPT-4.
Anthropic, a rival of OpenAI, has had an exceptional year, raising a combined total of approximately $6 billion. In September, AWS announced its $4 billion investment in the San Francisco-based firm, making it their primary cloud provider. Shortly after this reinforcement, Google also pledged its support for Anthropic through a $2 billion deal.
Anthropic’s situation is unique this year due to the backing from two of the three major hyperscalers, with AWS and Google seeing it as their preferred contender against OpenAI in 2024 and beyond. Just this week, Anthropic unveiled plans to raise an additional $750 million in funding led by Melo Ventures. Clearly, Anthropic is one to keep an eye on in 2024.
With generative AI continuing its rapid growth trajectory and major players investing heavily in startups within this field, it is evident that the transformative power of AI is recognized across industries. As we move into 2024, all eyes will be on these companies as they strive to push the boundaries of what generative AI can