July 13, 2024
Will the power of data in the AI era leave startups at a disadvantage?

If you read any news about business, technology or startups today, you’re almost certain to find at least one mention of AI. And with good reason: Tech is on the hunt for its next growth vector.

Over the years, we’ve seen lots of interesting technologies strive for that mantle. From blockchain-based technology, to AR and VR for both consumer and enterprise applications, to creator-focused platforms, the list is long indeed.

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Most of those technologies, however, lost much of their luster when it became clear that it would take much longer than many expected for them to reach mass adoption. In some cases, the technology was not ready for everyday use, or it wasn’t as applicable for corporate or consumer usage as everyone thought. In many cases, they were simply too unwieldy to implement.

AI is the latest in that long line of hopefuls. Indeed, it has pretty much earned its place: Large language models are incredibly interesting and can serve a host of new and existing applications. Invariably, that has spurred public-market investors to expect tech companies to unlock new opportunities for growth from AI. Tech CEOs feel the same way, as do venture capitalists.

The industry is suffused with incredible optimism around the use of new AI technologies. Money is flowing into companies of all sizes and shapes that want to build AI models, help customers train and use those models, protect data from (or conserve information inside) LLMs, or apply the technology directly for various use cases.

It’s still unclear how all these new AI-related features and tools will be monetized, but everyone generally seems to agree that this New Thing really does have legs and it’s reasonable to be optimistic about AI’s impact on our lives.

I’m here for it. But I am also worried about who is going to make all the money.

It’s a rich company’s world

Rewinding the clock to July, Reuters noted that of the $173.9 billion that PitchBook counted in the first half of 2023, venture capitalists “poured more than $40 billion into AI startups.” That’s almost a quarter of all the money invested in that time — a simply immense portion at a time when VC activity is declining around the world.

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