- Investors have started pouring money into the generative AI space.
- Entrepreneurs are encouraged to consider generative AI as a tool to solve a host of problems.
- This year will be the year when new ways of using generative AI will thrive.
As ChatGPT goes viral and “generative AI” becomes a buzzword, many venture capitalists are eager to invest in the space.
If the early 2010s were the era of startups with the “It’s like Uber, but for (fill in the blank)” elevator pitch, we may be entering the era of founders explaining why their companies are like ChatGPT, but for, well, everything.
Content creation firm Jasper uses the technology behind ChatGPT, and raised $125 million in a Series A in October, valuing the company at $1.5 billion. Jasper’s competitor, Copy.ai, which uses ChatGPT for marketing, raised $11 million in Serie A in October 2021.
There’s generative AI for healthcare, with startups focused on physicians Atropos Healthand signature of synthetic health data integrates all raised funds in the last 12 months. AI-enabled video editing home Runway raised a $50 million Series C in Decemberwhile AI-enhanced design Creative Fabrique raised $61 million in January 2023. In education, there is an AI-generated teaching feedback startup TeachFXwhich raised $10 million in September, and AI-enhanced textbook company Prof. Jim with a seed round of $1 million in January 2022.
And there is much more to come, said Grace Isford, a partner at Lux Capital.
“We are at an exciting inflection point for AI – we are just at the tip of the iceberg of the many vertical use cases for large language models beyond the creative industries to spaces like life sciences, manufacturing and healthcare.” Isford said. “We will likely get to the point where AI is seamlessly integrated into daily workflows.”
The beauty of recent generative AI models is that they are available to other companies. OpenAI, the operator of ChatGPT and DALL-E, works with Jasper, Copy.ai, and mental health startup Koko, among others.
An avalanche of new companies.
As access to generative AI models becomes easier, founders can get their “ChatGPT, but for plant lovers” idea up and running much faster than before. For many investors, that’s a good thing. They believe that generative AI can become as ubiquitous as the cloud or the Internet.
But in the future, there is a risk that startups will use ChatGPT for ChatGPT’s sake. Not all generative AI companies have longevity, and not all industries have problems that generative AI can solve.
When Uber began its rise, suddenly, there was an Uber for pets, the pet and human transportation app SpotOn, and an Uber for groceries like Getir, but only a few became as successful or transformative as Uber.
For now, investors are confident their bets on generative AI will pay off, said Josh Constine, a partner at Signal Fire.
“As with most fashion industries, there are companies that are or will be worth much more, and many more than ever will live up to their hype,” Constine said. “But unlike some previous cycles where utility seemed speculative or at least many years away, we are already seeing traditional businesses transformed by the breadth and efficiency of generative AI.”
It’s still early days for generative AI, and there will still be more new use cases that companies will come up with for the technology.
Eventually, generative AI will lose its luster and startups will have to sink or swim the same way all businesses do: steady revenue and profit. But for now, being nervous is enough.
