It looks like we’re back to weekly billion-dollar raises at multi-billion-dollar valuations, at least when it involves generative AI startups.
Last week, AI scales raised $1 billion in a round led by Speed up which values the data labeling and assessment startup at a staggering $13.8 billion. And in fact this week Elon Muskgenerative artificial intelligence start-up, xAIofficially announced a $6 billion round that values the company at $24 billion.
xAI round – including investments from Valor Equity Partners, You, capital, Andreessen Horowitz, Capital of Sequoia, Fidelity Management and Research Co.Prince Alwaleed Bin Talal AND Kingdom Holding Co.among other things — makes Musk’s startup the second most respected generative AI company in the world, behind its only competitor OpenAI.
Although rumors about the round had been circulating for a very long time, and some investors had leaked – especially since everyone knew that many of them can be the same as those that helped Musk take over X, formerly Twitterprivate – It was still interesting to see the overlap between many investors and some of the other major LLM players.
Of course, the most evident is Sequoia. VC giant supposedly took part in the sale of OpenAI shares for $300 million, with a valuation ranging from $27 billion to $29 billion.
However, Sequoia wasn’t alone in this deal. Andreessen Horowitz was also a part of that deal, and the Silicon Valley enterprise titan didn’t stop there when it got here to its generative AI aspirations.
Andreessen also led a Series A round of roughly $418 million for the Paris-based team Mistral AI — which takes a barely different approach to building an LLM than OpenAI because it focuses on an open source approach. (This was the case earlier this month reported the startup was approaching a round of around $600 million from existing investors Generic catalytic converter AND Partners of the Lightspeed enterprise that may value it at $6 billion.)
Investors can, in fact, invest in greater than one startup in a very specific industry, akin to the generative AI/LLM building vertical. Microsoftis also an investor in OpenAI, Mistral and an artificial intelligence company from the United Arab Emirates G42.
However, VCs have typically stayed away from overlapping investments and investing in competitors. This norm seems to have modified barely as the enterprise capital industry has grown, and now it seems that the AI craze has completely erased this rule of thumb.
VC firms are clearly afraid of missing out on the AI revolution – perhaps the biggest change since mobile devices – and the old ways don’t appear to apply.
Things that caught our eye and more:
- Another investor in the xAI round was also noteworthy – not because he invested in other competitors, but because he had been a big player in AI recently. Over the last yr and a half, among others: Fidelity Management and Research Co. made a $642 million minority investment in an AI cloud infrastructure company CoreWeave at a $7 billion valuation, participated in a $500 million-plus Series I for an AI-enhanced data analytics company Data cubes which valued the company at $43 billion and led a $150 million Series D for chip startup Astera’s laboratory which valued the company at nearly $3.2 billion at the end of 2022. These are huge rounds that are all about artificial intelligence.
- Not every part in AI has been about Elon Musk and xAI in recent days. A startup from New York also caught our attention and raised a small amount of $5 million. ThinkLabs AI wants to enhance network planning by combining intelligent automation and artificial intelligence and has developed an AI-powered second pilot to assist control room operators operate complex, modern networks more efficiently. He co-hosted the round Powerful undertakings AND Active impact investing.