Too Many Options

NLU

Last week, Sam Altman took a nuclear energy company, Oklo, public through his SPAC.

Oklo kicked off trading on the NYSE by taking a 54% nosedive. Nonetheless, the company raised $306M in gross proceeds from the transaction. Not bad for a company that’s pre-revenue…

Altman’s corporate endeavors often seem outright outlandish:

• Working with former Apple Chief Design Officer, Jony Ive, to create an artificial intelligence powered personal device. In talks with Emerson Collective and Thrive Capital to raise $1B for the project.

• Working to raise $7T (trillion) to fund new chip factories. In serious discussions with UAE officials and other investors.

• Does not have any equity in OpenAI because he already has enough money

Not to mention beefing with Elon Musk

Today let’s focus on gleaning insights about VC funding from OpenAI

in the scope

In 2023, total venture capital funding reached $170.6B.

Around 33% of this total - $57B - went to artificial intelligence startups.

Around 18% of this total - $10B - went to OpenAI.

VC is known to be a game where the top startups win big and OpenAI in 2023 is a great case study of this effect.

If you add Anthropic which closed a $4B minority sale in September, the two startups accounted for 24% of AI funding.

While the big dogs battle for market dominance, funding for smaller AI players is thinning out.

• Investing in AI foundational models is capital intensive which explains the large uptick over the past few years

• The rapid rise and fall of large AI startups (i.e. Stability AI) has forced investors to get more pointed in regards to understanding the AI value chain

• According to PitchBook, Q1 2024 saw 1,545 AI deals in comparison to Q1 2023’s 1,909 AI deals.

• In a BCG survey, 66% of 1,400 C-Suite executives said they don’t expect generative AI to bring about substantial productivity gains.

the bigger picture

Zooming out, we can take a broader view at VC funding

Here’s a great post from Ben Zises, founder of SuperAngel.Fund, that goes in depth on the state of venture in Q1 2024.

A couple points I want to focus on:

• Investors are giving a lot of attention and support to their portfolio companies instead of funding new startups. First time financings are at multi-year lows

• Investors are exerting a level of caution that hasn’t been seen in some time. Term sheets now include forms of downside protection

• Investors are sitting on $300B worth of dry powder, a quantitative testament to their heightened selectivity

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Headlines

• Elon Musk’s xAI nears $18B valuation as AI race heats up. Forbes article here

• Goldman Sachs wins $43.4B investing deal for UPS pension funds. Institutional Investor article here 

• Will Ferrell invests in U.K. soccer club, Leeds United. Deadline article here 

• OpenAI inks deal to train AI on Reddit data. TechCrunch article here

Send this to the friend who thinks AI is a 6’0 slasher