Venture capitalists race to land next AI deal on Big Tech's turf

by Jacob Solomon Mar 26, 2023 News
Venture capitalists race to land next AI deal on Big Tech

A response by ChatGPT, an AI chatbot developed by OpenAI, is seen on its website in this illustration picture taken February 9, 2023. — Reuters
A response by ChatGPT, an AI chatbot developed by OpenAI, is seen on its website in this illustration picture taken February 9, 2023. — Reuters

In December and January, several venture capitalist from the US and Britain raced to Paris to compete for a stake in a new artificial intelligence company.

Dust had just two people. It hadn't been incorporated. Three people familiar with the deal said it rejected a generous proposal by Coatue Management.

Two people said that Sequoia Capital won and raised $5 million. Dust wants to improve the productivity of white collar workers.

Competition in Silicon Valley has increased due to the rapid push on artificial intelligence by Microsoft and Alphabet. In order to take on their Big Tech peers, startups in the space are closing deals in a few days rather than weeks. It is a good place to be in the venture-capital market.

"Big Tech companies with massive investments in artificial intelligence are not going to let their distribution advantage slip away easily," wrote Konstantine Buhler, a Sequoia Capital partner who led the Dust deal.

generative artificial intelligence is a subset of artificial intelligence that exploded in popularity with the help of Microsoft. After training on the inputs of past data, such technology can create almost any text, image or other content on command.

The founder of a generative artificial intelligence company in the United States said that the new internet was thought to be the new one.

According to data from PitchBook, investment in such startups has increased to over $5 billion since the beginning of the year. The closing of Silicon Valley Bank may affect debt financing, but it's not the end of the world.

The firm is getting more generative artificial intelligence pitches than just six months ago, according to a founding partner.

"Now you are starting to get herd mentality among venture capitalists" said Kaul. It means that companies will get funding, then fail and give the entire sector a black eye.

More than ninety percent of venture capitalists are very risk averse. People don't dive in until they see a real application

Competing offers

Observers predicted that artificial intelligence could disrupt search-engine technology and market dominance of the company. Microsoft upgraded its search competitor Bing two months after it launched.

Even for a sale if not an initial public offering, investors sense opportunity, and some are betting on the fact that artificial intelligence will surpass larger competitors., a search engine company founded in 2020 and backed bySalesforce's CEO, has found a new lease on life thanks to generative artificial intelligence. The company said it has attracted more attention from users and investors.

Jordan Jacobs said the upstart was an example of the right people with the right technology and opportunity that can disrupt even the most successful business models in the world.

Millions of dollars have been spent on productivity tools. These companies help writers and salespeople do their jobs more quickly. Big Tech has released previews of new features for Microsoft Word that can be used to draft marketing copy.

It's not clear how Jasper and will fare once they are competing. The CEO of said that its in-house expertise and sales focus made it stand out, while the vice president of Jasper said that its artificial intelligence made it stand out.

Any technical advantage that could make a challenger stand out is what investors are looking for. Magic, a software engineering tool that can help write and edit code, is building its own specialized artificial intelligence and user interface.

The company raised $23 million in order to compete with Microsoft.

The biggest race at times is between investors themselves. Saam Motamedi said that Greylock passed on backing a founder who had 10 competing offers to lead a funding round.

He said that deals that might take up to six weeks in Series A financing are coming to an end in a few days.

Many term sheets from most of our competitors are what we have done in Artificial Intelligence. The entrepreneurs can pick who they want to work with.

The environment could be described as excessive, but there is a lot of substance behind it.