THE ‘AI-POCALYPSE’
(TSLA), (DOCU), (HOOD), (COIN), (NVDA), (MSFT), (GOOGL), (AMZN), (RDDT), (ALAB)
Silicon Valley's buzzing with all things AI these days, but hold on a sec – venture capitalists are keeping their checkbooks under lock and key. This quarter, they tossed $36.6 billion at startups, which sounds like a lot of cash. But here's the shocker: that's a near 30% dive compared to last year.
Remember, 2023 was already a funding desert for startups, and it seems 2024 might be even tougher. So, what's going on here?
Well, the economy's a dumpster fire right now, leading investors to get cold feet about IPOs. Everyone's counting their pennies like we're back in the Depression Era. Even those venture capitalists are guarding their cash like it's gold bullion.
With stubborn inflation hanging around like a bad smell, a recession seems more likely than a Tesla (TSLA) stock split.
It's a rough climate for companies across the board – from old-timers like DocuSign (DOCU), who are probably kicking themselves for not selling out during the boom, to those crypto enthusiasts at Coinbase (COIN)...let's just say the party's winding down.
Meanwhile, those lucky founders, the ones who cashed out before everything went south, are hunkering down like they're preparing for a blizzard. No way they're going back for more investment right now – those valuations are going to be brutal.
In fact, companies like Robinhood (HOOD), the guys who cater to those meme-stock-loving investors, are probably feeling the heat as the cash dries up. This is definitely not a great time to be in that business.
But hey, they're not alone – the entire startup world is feeling the squeeze. In fact, things aren't just tough, they're downright catastrophic. It's like we're all on the Titanic, and the band just keeps playing.
Sure, Reddit (RDDT) and a few others (who even are Astera Labs (ALAB)?) barely got their lifeboats launched, but the rest of the year is looking grimmer than a Silicon Valley winter. Honestly, I can count the potential IPOs on two hands. It makes sense – those venture firms haven't seen a decent payout in ages. Nobody's throwing good money after bad in this climate
But hold on, there's a flicker of hope.
Global venture funding isn't a total disaster zone – yet. While the numbers look similar to last year, that $96 billion went to wayyyy fewer companies.
There's a clear divide happening: those hot AI startups are swimming in cash, while the rest are scrambling for change just to stay afloat.
The startup world might be on life support, but AI companies are living their best lives. Just ask Cohere – those guys scored a mind-blowing $5 billion. Their insane funding round proves that investors are going all-in on AI, even as they slam the brakes on everything else.
Cohere's success isn't a fluke. Tons of AI startups are pulling in major funding.
Anthropic scored a cool $580 million in 2023, with big names like Spark Capital and Google Ventures backing them. That put their valuation at a sweet $4.1 billion – not bad for an AI startup.
Adept AI Labs, the ones focused on AI that can learn on the fly, landed $350 million in early 2024, led by Sequoia Capital. Those Andreessen Horowitz guys are in on the action, too.
Meanwhile, fancy language processing is Inflection AI's game, and they convinced investors to toss them $225 million in late 2023. Tiger Global Management clearly thinks they're onto something big.
As for healthcare + AI? That's a recipe for serious cash. Hearth.AI pulled in $180 million in 2024 – Khosla Ventures is leading the charge, with Founders Fund and Bessemer Venture Partners also betting big.
This unique position also means tech giants like Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) are driving the AI boom.
Nvidia continues to be the king of those fancy GPUs that make all those AI models tick.
Microsoft's not about to be left in the dust – they're sneaking AI into everything they own, from their cloud stuff to that boring old Office suite.
Alphabet (aka Google) likes to think they practically invented AI, and their fancy lab, DeepMind, is constantly churning out the next big thing.
And let's not forget Amazon – those guys are obsessed with staying ahead, pushing AI hard with their cloud business, AWS. Want robot helpers? They've probably got an option for that — maybe one that cleans your house while you're at the golf course.
More importantly, these giants have the money and the brainpower, fueling the hot little startups lucky enough to catch their eye. That means the money well for these AI startups won’t dry up anytime soon.
What do these mean for us? Well, I think this mess is a wake-up call: it's time to get picky. Ditch those sinking ships and take a look at the AI companies that are making all the headlines (and all the money). The rest of the startup world might be going up in flames, but AI has proven that it is in its own little oasis, a bubble bursting with opportunity. Don’t get left behind.
