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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:

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.

OpenAI accounted for ~18% of AI VC dollars in 2023

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

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