Big technology companies like Amazon, Google, and Microsoft have invested more money into generative AI startups than traditional venture capital firms in 2023. VC firms have historically needed to closely monitor the technology industry and be prepared to invest early, but now they are competing with technology giants that have more than just deep pockets. Venture investing in technology hit a record high in 2021 due to historically low interest rates.
Technology investing decreased slightly in 2022 but increased this year thanks to Big Technology’s participation. In January, Microsoft announced a “multibillion-dollar” investment in OpenAI. Amazon also announced a $4 billion investment into OpenAI competitor Anthropic, and Google followed with another $2 billion. In addition to cash, Amazon, Google, and Microsoft can provide startups with cloud infrastructure and access to powerful hardware to train AI.
Big Technology’s deep pockets have inflated the valuations of private startups, making it difficult for VCs to get involved. However, traditional firms are still finding ways to participate, such as Thrive Capital leading OpenAI’s employee stock sale and Mistral AI receiving funding from traditional VC firms. AI is expected to revolutionize how we interact with almost everything, and right now Big Technology companies are owning it all.
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