Special Edition: Generative AI Venture Capital Trend

Sequoia, Coatue and others are racing with a FOMO atmosphere not seen in A.I. in years into 2023.

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Recently I noticed a sharp interest in Venture Capital in Generative A.I. This has been brewing for several months as fads quickly disappeared in other domains, but it’s reaching a plateau in the Fall of 2022. I’d like to quickly explore why that is.

Coatue led both Stability.AI and Jasper.AI rounds which were pretty enormous. jasper. Granted Coatue was mostly big on Stability.AI.

In recent days Sequoia Capital published a market map of some of the hottest startups in the generative AI space and Coatue dropped a white paper.

Sonya Huang 🐥 @sonyatweetybird

Introducing the @sequoia Gen AI Market Map!🌎 We’ve decided to map out this emerging frontier, thanks to all the contributions and feedback we’ve received. This space is moving quickly – this map is a living document, so keep the suggestions coming! Who else should we include?

Generative AI

https://github.com/topics/generative-ai

To say that GenerativeAI might be a category creator is no understatement when you realize the breath of its potential impact. If GPT-3 can create this much hype, what will GPT-4 do? GPT-4 should be announced sometime in 2023 by OpenAI.

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Ideological Democratization of Accessible A.I.

"AI promises to solve some of humanity's biggest challenges. But we will only realize this potential if the technology is open and accessible to all," said Emad Mostaque, founder and CEO of Stability AI.

While DeepMind and Microsoft try to dominate, more startups are taking a more open approach, think of Hugging Face, for instance. Hugging Face hosts a lot of models and demos, just look at Hugging Face’s tags list for an idea.

So what is going on?

Several new programs, commonly called generative AI, released in the past few years can take a single phrase and generate never-before-seen images that match the prompt. They may soon be able to do a lot more than that!

In 2011, IBM's Watson supercomputer beat two champions in a game of "Jeopardy!" A decade later, we’ve made some serious progress in the past five years.

• Stable Diffusion was released on August 22, 2022 and it feels like a brave new world.

• Between May, 2020 when GPT-3 was announced and today, a lot has happend to make Generative AI the next big thing!

"At Coatue, we believe that open source AI technologies have the power to unlock human creativity and achieve a broader good," explained Sri Viswanath, general partner at Coatue. "Stability AI is a big idea that dreams beyond the immediate applications of AI. We are excited to be part of Stability AI's journey, and we look forward to seeing what the world creates with Stability AI's technology."

So what’s got Sequoia, Coatue and others like Conviction so hyped up?