Insights from NY Tech Week 2024: The State of AI Venture Landscape and Investment Opportunities
Unveiling Key Trends and Strategic Insights in the AI Market
The AI sector is rapidly evolving, offering unprecedented opportunities for innovation and investment. From generative AI chatbots that can perceive emotion from audio and generate expressive synthesized speech, to AI assistants that can watch and remember where things are visually to complete tasks, the past few months in the AI space have been absolutely groundbreaking, it’s almost hard to keep track of all the advancements in such a short period of time.
Earlier this month, Untapped Ventures had the opportunity to present on the State of AI Venture Landscape and Investment Opportunities at New York Tech Week. It was an incredible event with some of the top leaders in the field in attendance, bringing together some of the top thinkers and doers of our time in the generative AI space. During our presentation, we broke down some of the key players in AI to watch, emerging trends, and strategies that can maximize returns and capitalize on this technology's transformative potential.
AI and Its Rising Impact
AI has transitioned from being a mere buzzword to a fundamental technology reshaping industries from healthcare to automotive to social media. Leaders like Elon Musk, with ventures such as xAI, are at the forefront of this transformation, raising billions in funding and driving technological breakthroughs. Notable milestones include ChatGPT achieving 100 million monthly active users globally in just two months, OpenAI’s GPT-4o introducing a multi-modal model focusing on audio, video, vision, and emotion, and Google’s AlphaFold 3 revolutionizing drug discovery by predicting protein structures.
OpenAI’s growth has been particularly remarkable, especially over the past few months alone. More than 92% of Fortune 500 companies use ChatGPT, including 2 million developers. ChatGPT has around 181 million users and receives 1.7 billion visitors a month, ranking 9th in web traffic above Netflix and Bing. OpenAI hit the $2 billion revenue mark last December, just seven years after its founding.
In a recent move to regain the AI initiative, Google has announced plans to integrate generative AI features into its core search engine and Android operating system. This includes a new "AI overviews" feature that will provide conversational answers to certain queries, as well as updates to its Gemini chatbot to enable audio-based interactions. Google is leveraging its vast user base and distribution channels to compete with OpenAI and Microsoft's advancements in generative AI.
Google will begin rolling out the AI overviews feature to billions of users worldwide by the end of 2024. This represents a huge step in reshaping the company, as the AI-powered answers aim to provide more comprehensive and conversational responses compared to the traditional list of search results. Google is proceeding cautiously, labeling the feature as "experimental" due to the potential for AI-generated information to be inaccurate.
Meanwhile, OpenAI has continued to advance its offerings, unveiling a new version of its GPT language model called GPT-4o. This model includes a voice assistant feature that can engage in real-time, natural conversations, drawing inspiration from the vision of AI portrayed in the movie "Her." The new model is faster and less expensive than OpenAI's previous top-of-the-line offering, reflecting the company's push to expand its user base and generate revenue from its generative AI technology.
It’s safe to say if you aren’t taking advantage of the massive AI boom in tech today, you could be missing out. And even more, the field is ripe for investment opportunities, especially among some of the biggest players in the space, as well as earlier stage companies.
The Venture Landscape
Despite a downturn in global VC funding, the AI sector remains a bright spot, attracting substantial investments. In 2023, AI startups raised significant capital, creating numerous unicorns and demonstrating robust growth. For instance, xAI raised $6 billion on a $24 billion valuation, and Figure secured $675 million in funding. Top tier investment firms like Andreessen Horowitz, Sequoia, and Khosla Ventures are leading the charge with billions invested across hundreds of AI companies.
Promising sectors we covered in our presentation include drug discovery, material sciences, neurotech, synthetic data and robotics, and quantum AI. AI adoption continues to surge, with 86% of CEOs agreeing that AI and business are inseparable. Major firms report implementing generative AI solutions, resulting in substantial revenue increases and cost reductions.
Investing in AI
To navigate the complexities of AI investments, it is essential to identify native AI startups, evaluate the four layers of AI value (applications, infrastructure, models, and compute) so you know how to invest, and assess each startup's defensibility. Developing a systematic approach to identify and evaluate AI investment opportunities is crucial to building a successful portfolio. This could involve building an AI sourcing strategy, joining AI angel groups, attending AI accelerator demo days, and investing in AI funds.
We at Untapped Ventures are committed to finding the best AI opportunities that leave a tangible impact in moving society forward. Over the past year, we have invested in several AI-focused companies:
Openwater: Innovating portable medical imaging technology and therapeutic devices.
Lemurian Labs: Tackling AI's compute capacity limitations.
ScienceIO: Transforming healthcare data into high-quality, computable information.
Conclusion
New York Tech Week was just the start of the conversation on how to understand the complex dynamics of the AI playing field and how to get started with investments. As AI continues to shape the future, the opportunities for investment and innovation are vast. Whether you're a founder looking to strengthen your startup or an investor seeking to capitalize on the next big thing, understanding the current landscape and emerging trends is crucial.
For further details, you can access our comprehensive presentation deck and AI cheat sheet by clicking here.
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Join the AI revolution, build your A-team, and explore the gold rush of investment opportunities. If you have any questions or would like to connect, feel free to reach out.