Venture capitalists (VCs) around the world have recently begun to recognize the massive potential of artificial intelligence. According to PitchBook’s latest survey of 58 venture capitalists, 60 percent of them expect growth from AI to lead all tech sectors in the next five years. This enthusiasm comes amidst news of the large-scale success of ChatGPT, an AI-powered chatbot developed by Microsoft-backed OpenAI.
ChatGPT’s popularity has kickstarted a wave of investment in the AI sector. VCs believe that the generative AI capabilities developed through ChatGPT, and other tools like it, will create a new generation of tech unicorns with private companies valued at one billion dollars or more. On top of this, more and more investors are examining how artificial intelligence can be integrated into the investment process. These innovations, paired with the overall optimism of the venture capital environment, make AI an incredibly attractive prospect for venture capitalists.
However, there are also risks associated with investing in artificial intelligence. Alongside the commodification of services and products, more established companies are becoming increasingly aggressive in terms of patent applications, mergers and acquisitions in order to keep their competitive edge. There is also a challenge in finding the right balance in terms of long-term planning versus short-term gains.
At the core of the PitchBook survey are the insights from those involved in venture capital. Bloomberg is reported to have launched a large language model called BloombergGPT, and PanAgora, a quantitative asset manager based in Boston, has been exploring the capacity of AI in winning mandates. Meanwhile, EQT, a private equity firm based in Sweden, has developed an AI engine that aids the deal sourcing process.
Clearly, venture capitalists have faith that artificial intelligence will generate significant growth and create new opportunities. Innovations in the AI sector are more important than ever and the potential of AI to reshape businesses is immense. In order to remain competitive, companies and venture capitalists alike must continue to view AI as an evolving industry and embrace the opportunities and challenges involved with it.
