In May, CoreWeave, a cloud computing services provider for ai companies, raised $1.1 billion, followed by $7.5 billion in debt, valuing it at $19 billion. Scale ai, a data provider for ai companies, raised $1 billion, valuing it at $13.8 billion. And xAI, founded by Elon Musk, raised $6 billion, valuing it at $24 billion.
These funding rounds have boosted overall deal activity in the industry in terms of dollar amount and number of deals, said Kyle Stanford, research analyst at PitchBook.
“It’s not going down anymore,” he said. “It’s already hit rock bottom.”
This activity has led some venture capitalists to change their message. Last year, Tom Loverro, an investor at IVP, predicted a “mass extinction event” for startups and encouraged them to cut costs. Last week, he declared that era was over and dubbed this time the “Great Awakening,” encouraging companies to “fuel” growth, particularly around artificial intelligence.
“The ai train is leaving the station and you have to get on it,” he said. x.com/tomloverro/status/1806011808056332651″ title=”” rel=”noopener noreferrer” target=”_blank”>wrote in x.
The startup crisis began in early 2022, when many money-losing companies struggled to grow as quickly as they did during the pandemic. Rising interest rates also pushed investors to seek less risky investments. To compensate for the decline in funding, startups cut staff and scaled back their ambitions.
Then, in late 2022, OpenAI, a San Francisco-based ai lab, kicked off a new boom with the launch of its chatbot ChatGPT. The excitement around generative ai technology, which can produce text, images, and videos, triggered a frenzy of startup creation and funding.
