Investor Frenzy for AI: Record-Breaking Deals and Billion-Dollar Bets on the Future

Despite concerns, investor enthusiasm for AI startups is soaring. Just a few numbers to illustrate: global VC investments jumped 25% QoQ to $94.3B in Q2, with the U.S. accounting for $55.6B. This surge was driven by mega AI deals like Coreweave ($8.6B) and xAI ($6B). Impressive, right?

In August 2024, one out of every four dollars went into AI, compared to every fifth dollar in 2023 and every tenth in 2022. This makes AI the most heavily invested sector at the moment, followed closely by Healthcare and Biotech, according to Crunchbase. 

Recently, OpenAI co-founder Ilya Sutskever raised $1B for his new venture, Safe Superintelligence (SSI), a 3-month-old startup with 10 employees, already valued at $5B. Investors' trust in one top talent is remarkable. SSI has made it clear they’re not chasing near-term profitability. Their focus? Safety, security, and progress, free from commercial pressures—so no financial returns anytime soon.

While details on SSI's products are still sparse, the applications of safety-first AI make sense for fields like autonomous driving, cybersecurity, and disaster management.

For context, we share the excitement for AI, though we do question certain business models of AI giants. Our recent AI investment, Cohere, more than doubled its valuation after a primary round this year. Cohere stands out for its focus on B2B LLM services—a business model that emphasizes profitability sooner rather than later.

Sources used: kpmg.com, ssi.inc, reuters.com