Big tech companies have been the biggest investors in AI startups over the past year, especially the big three: Microsoft, Google and Amazon.
That’s according to data from PitchBook. Big tech companies account for about two-thirds of the total investment of 24.4 billion euros ($27 billion). The researchers explain why private investors can hardly compete with big tech companies when investing in AI startups.
First, the value of AI startups has increased so much that private investors cannot compete with what large tech companies can invest. The money invested by the big tech companies significantly drives up the investment amounts in AI startups.
In addition, “regular” private investors face higher interest rates and falling valuations of companies in their investment portfolios. This limits their ability to generate sufficient capital to compete with large tech companies.
Other possible causes are investment over the past year focused on LLM providers such as OpenAI, Cohere, Anthropic and Mistral.
Moreover, it is often impossible for traditional private investors to keep up with all the developments and know which AI-related spin-offs emerge from, for example, Google DeepMind or other developers.
Diverse investment opportunities
Despite the difficulties faced by traditional investors in getting a foot in the door, even in the field of AI, there are, of course, bright spots visible. Some private investors have managed to get in at OpenAI and Mistral.
Moreover, when it comes to AI, private investors do not always have to invest in the developers of the LLMs. Instead, some private investors seek out companies that develop applications based on the models of OpenAI or Anthropic, for example.
The PitchBook researchers, therefore, argue that there are still many opportunities for private investors in the field of AI to invest, so they, too can get a slice of this attractive pie.
2 days ago
