In May, CoreWeave, a provider of cloud computing services for artificial intelligence companies, raised $1.1 billion and followed that with $7.5 billion in debt, valuing it at $19 billion. Scale AI, a data provider for artificial intelligence companies, raised $1 billion, valuing it at $13.8 billion. And xAI, founded by Elon Musk, raised $6 billion, valuing it at $24 billion.
Such funding rounds boosted the industry’s overall transactions by dollar amount and number of deals, said Kyle Stanford, research analyst at PitchBook.
“It’s not going down anymore,” he said. “The bottom has already fallen out.”
The activity prompted some venture capitalists to change their message. Last year, IVP investor Tom Loverro predicted a “mass extinction event” for startups and encouraged them to cut costs. Last week, he declared that era to be over and christened this time the “Great Revolution”, encouraging companies to “put gas” on development, particularly around artificial intelligence.
“The AI train is leaving the station and you need to be on it,” he wrote to X.
The start-up slump began in early 2022 as many money-losing companies struggled to grow as fast as the pandemic. Rising interest rates also prompted investors to chase less risky investments. To compensate for dwindling funding, startups cut staff and scaled back their ambitions.
Then, in late 2022, OpenAI, an artificial intelligence lab in San Francisco, started a new boom with the release of the ChatGPT chatbot. The excitement surrounding genetic AI technology, which can generate text, images and video, has sparked a frenzy of startups and funding.
