Ali Javaheri, an associate analyst at PitchBook, said there was an overall dropoff in venture capital funding and valuations of startups based on data the company tracked.
“Basically, that was kind of just caused by the interest rate hike and subsequent liquidity crunch,” Javaheri told The Hill, referring to the Fed’s effort to rein in inflation through higher interest rates.
“In spite of that, though, AI and generative AI in particular, has kind of shown a lot of resilience and just been kind of a sort of oasis of funding activity compared to the broader tech sector,” Javaheri added.
The buzz around generative AI, especially since the public launch of OpenAI’s ChatGPT tool in November, is leading to an influx of venture capital money in the industry.
There have been $14.6 billion in venture capital deals in generative AI in the U.S. so far this year. By comparison, there was $11 billion in investments in all of 2021 and 2022 combined, according to data from PitchBook.
There’s a similar trend globally. In 2023, there’s been $51.9 billion in venture capital deal activity in generative AI, compared to roughly $14 billion in the previous two years combined, according to PitchBook’s data.
WedBush analyst Dan Ives called generative AI the most transformational tech trend since the World Wide Web in 1995.
“It’s been a massive change around tech spending from a very cautious environment earlier this year,” Ives said.
Read more in a full report at TheHill.com.