It really never ends.
Only a few weeks have passed since then OpenAI announced a long-awaited raise of $6.6 billion at a post-money valuation of $157 billion. The Develop capitalThe raise nearly doubled the San Francisco-based artificial intelligence giant’s $80 billion valuation from its secondary offering in February.
The value seemed high for a company that was losing a lot of money and now has a 46x revenue multiple. But OpenAI is OpenAI. This is ChatGPT AND Sam Altman. It’s a foremost character, a soap opera and a concern for regulators. This is what began the artificial intelligence gold rush that began just a few years ago and is still going strong.
And while there have been skeptics about OpenAI’s raise, the gold rush it has created seems poised to push much more AI startup valuations to levels rarely seen for enterprise ventures.
There have been reports about this over the last few weeks xAI, Embarrassment and possibly Anthropic everyone is raising recent money (hey, AI ain’t low-cost) at exploding valuations.
It was just this week reported Elon MuskBurlingame, California-based xAI is in preliminary talks with investors for a recent $5 billion financing round that will value it at about $45 billion – $1 billion greater than it bought Twitter Down.
xAI just closed a $6 billion round at a post-money valuation of $24 billion in May, which suggests that if it raises a recent round, its value will almost double in five months – to the point where it can now be the ninth most precious VC-backed start-up (based on our Unicorn board), just ahead Data cubes.
Of course, xAI is not the only generative AI company seeking to get into this sophisticated neighborhood. Just a few weeks before OpenAI officially announced the increase, this was indeed the case reported rival company Anthropic has just began talks with investors about obtaining a valuation of $30-40 billion.
In February alone, the San Francisco-based startup raised $750 million in fresh capital, valuing it at around $18.5 billion – again meaning it’s poised to double its valuation and change into one of the 15 most precious startups in the world.
It was also like that on a smaller scale reported just over a week ago, AI search startup Perplexity — which in June apparently received between $10 and $20 million SoftBank value USD 3 billion – is in talks raise recent funds this is able to almost triple its valuation to $8 billion.
The incontrovertible fact that the 167% jump in valuation to $9 billion could possibly be considered “downscale” says a lot about the current state of enterprise and AI funding.
At some point, the crazy valuation increases – seemingly monthly – have to stop, and investors have to ask themselves how they are going to make money on these deals. While this will likely not worry large corporations that otherwise profit from such deals, it is actually a consideration for VCs, who have often spoken about the lack of liquidity they face amid a sluggish IPO and M&A market.
However, that appears to be one other issue for one other day when it involves AI – where the escalation in AI valuation never ends.
Things that caught our eye and more:
Talking about skyrocketing valuations at a rapid pace, ex-Sales power 1 co-CEO Bret Taylorconversational AI startup Sierra this week raised $175 million in a funding round led by Capital of Greenoaks which gave it a valuation of $4.5 billion. Just in February, the San Francisco-based company raised a $110 million led round Capital of Sequoia AND Benchmark at reported valuation of almost $1 billion. A 4.5x increase in value in eight months is not too shabby. And yes, Taylor is also chairman of the board of OpenAI — whose large language models are powered by Sierra — although he has said he has no conflict of interest.