AI startups are not setting the venture world ablaze


Conventional wisdom around AI investment suggests artificial intelligence should be red hot right now with dollars flying at startups building with AI, akin to what was happening last year with web3 and metaverse companies. Well, guess what? According to a new report from CB Insights, conventional wisdom is wrong — dead wrong.

AI has been around for decades, but only recently have we seen a resurgence of interest in the sector with the release of OpenAI’s ChatGPT at the end of last year. Microsoft and Google soon followed with their own intelligent, natural language chatbots.

Since then, cloud infrastructure companies have been making various announcements related to providing the resources that companies need in order to build their own large language models. Enterprise companies like Salesforce, Box, ServiceNow, Zoho and many others, meanwhile, have announced generative AI products.

With all these big companies involved, it seems inevitable that startups related to AI should be launching out of the woodwork with investment dollars not far behind. It appears to be the technology everyone wants, one that’s smack dab in the middle of a major hype phase at the moment.

So where’s the investment?

According to CB Insights Q1 2023 investment data, the investment’s not there yet. In fact it’s downright listless: AI startups altogether raised $5.4 billion in the first quarter, 66% less than they had a year earlier. The number of deals also fell 37% to 554. That’s not supposed to happen in a frothy market.



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