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After years of booming growth, the AI industry is now facing a significant slowdown in investment, as outlined in a recent report by Stanford’s Human-Centered Artificial Intelligence Institute (HAI). The report highlights a marked decline in both private and corporate investment in AI for the second year in a row, with total investment falling 20% in 2023 compared to the previous year, Kyle reports. Despite this general downturn, some segments, such as Generative AI, continue to attract significant funding, indicating a selective but significant interest in specific AI applications.
AI investment is slowing down for a number of reasons, including a crowded market and the high cost of building large AI models. According to Gartner analyst John-David Lovelock, money is now flowing more towards large, established companies strengthening their positions, while it is becoming harder for new players to get a piece of the pie. Investors are becoming more selective and want to see real, consistent returns rather than just throwing money at promising growth. (That doesn’t stop them from raising billions of dollars in capital focusing on AI, of course.)
Despite these obstacles, there is still a strong belief in the future of artificial intelligence, especially in ways that it can boost efficiency and spark innovation in different fields. Right now, the market is going through a bit of a clean-up, shifting from the wild spending of the past to a more cautious and sustainable way of financing. This shift is key to creating AI solutions that actually work in the real world and can truly change industries and make their way into our battle-weary hearts.
Oh, and before we round up the rest of the startup news this week… Do you have a pitch deck that might fit the bill? My Pitch Deck Teardown series? You can submit yours here — I’d love to take a closer look and possibly share it with TechCrunch readers, along with an in-depth review!
The most interesting startup stories of the week
The Humane Ai Pin. Image Credits: Brian Heater / TechCrunch
Oh hello! Look! It is his triumphant return Longtime TechCrunch columnist Anthony Ha, who writes that Airchat, the latest brainchild of Naval Ravikant and Brian Norgard, is here to revolutionize social media with its groundbreaking concept: people talking to each other — shocking, right? Essentially a high-tech portable radio, this app lets you follow others, scroll through a feed, and interact with audio posts that are also easily transcribed for those who can’t stand the sound of human voices. It’s currently climbing the social ladder on the App Store, while it’s invite-only because nothing screams exclusivity like needing a golden ticket to hear strangers ramble. Whether this will actually reduce online controversy or just make it more melodic remains to be seen.
Airchat is like a tech-centric coffee shop where everyone is buzzing about the latest in Silicon Valley, with a transcription feature that even gets Pokémon names right – because of priorities. But don’t get too excited. it’s invite-only, making it another Silicon Valley whisperer network. And while it’s all fun and sound games, the platform’s relaxed approach to content management could make it the Wild West of voice chats, where the only sheriff in town is the mute button.
- Noname loses the unicorn horn: Noname Security, the cybersecurity startup that once floated at a $1 billion valuation, is now whispering sweet nothings to Akamai Technologies for a more modest $500 million.
- Dude, where’s my phone?: In a world where your smartphone feels like an extension of your hand, Humane is launching a $699 wearable, the Ai Pin, that promises to be the next big thing — and hardware editor Brian takes a deep dive into where it came from company… and where it can go.
- An army of “robots” breaks out.: Betaworks is diving headfirst into the artificial intelligence pool, but instead of splashing around with big LLMs, it’s floating a new idea — AI agents designed to tackle the mundane tasks we all love to hate. They’ve hatched nine of these digital minions from their latest “Camp” incubator, hoping to automate everything from email sorting to meeting scheduling.
The most interesting fundraisers this week
Image Credits: Ramp / Ramp co-founders Karim Atiyeh, Eric Glyman and Gene Lee
Rippling, the HR tech darling that’s raising venture capital like it’s going out of style, is at it again. This time, they’re passing around the Silicon Valley crowdfunding plate with $200 million in new capital, while also letting current shareholders cash out $670 million. This latest fundraising celebration, dubbed Series F, could raise Rippling’s valuation to $13.4 billion. Not too shabby for a company that, just last year during the Silicon Valley Bank collapse, had CEO Parker Conrad frantically tweeting and calling for dollars to make payroll. Now, with everyone writing record checks (and Coatue leading the charge), it looks like Rippling is less about making waves and more about making waves.
- They go up fast: Ramp, the apparently allergic-to-profit expense management startup, just raised another $150 million to keep the lights on and acquisitions. Now valued at $7.7 billion, Ramp is playing financial Tetris with a mix of old and new investors, including the crowded lineup of Khosla Ventures, Founders Fund and Sequoia Capital.
- And why do you think that is?: Two Chairs, the therapy startup that once espoused the graphic concept of “real human interaction,” has bowed to the digital wave, trading its sleek clinics for Zoom rooms. The company plans to continue expanding its digital domain, as finding the right therapist online is still as difficult as a Sudoku puzzle, at least you don’t have to leave your couch to get frustrated.
- Dust yourself off and try again: Rivos, the chip startup that Apple once accused of playing “Catch Me If You Can” with its trade secrets, somehow managed to turn its courtroom soap opera into a $250 million funding fiesta. After the Apple lawsuit drama cooled down, Rivos didn’t just walk away. they quickly returned to the lab to find chips that might just give the iPhone maker a run for its money.
Other Unmissable TechCrunch Stories…
Each week, there are always a few stories I want to share with you that somehow don’t fit into the above categories. It would be a shame if you missed them, so here’s a random goodie bag for you:
- You have been hacked: Apple is playing the digital knight in shining armor by sending mass ‘you might be hacked’ alerts to iPhone users in 92 countries. This is not a garden-variety phishing scam, but a full-blown spyware drama involving shadowy attackers and possibly an episode of the infamous Pegasus spyware.
- Tesla is cutting staff: Tesla, in a classic pre-payroll panic move, has decided to thin the herd by axing its 14,000 employees, including some of its star players. Apparently, the electric car giant is feeling the pressure from an ongoing EV price war, prompting a “company-wide restructuring” to supposedly boost productivity and prepare for its “next phase of growth.” This corporate euphemism translates into alienating even high performers, particularly those unlucky enough to work on now low-priority projects.
- Shaking of humanoid robotics: A day after retiring the hydraulic model, Boston Dynamics’ CEO discusses the company’s commercial humanoid ambitions with electric options.
- He continues to run Twitter into the ground: Elon Musk, in his latest attempt to save his corner of the Internet, has decided that the best way to deal with X’s bot epidemic is to hit new users where it hurts: their wallets. For the low, low price of an unknown fee, you too can prove your humanity and earn the privilege of posting on the platform.
- Hello, is the doctor in?: Hugging Face is always up for a challenge. This time, she decided to tackle the Wild West of AI in healthcare with her latest creation, Open Medical LLM. This new benchmark is essentially a Frankenstein’s monster of existing medical test sets, stitched together to see if AI can really handle the big leagues of healthcare without accidentally recommending leeches for a headache. It’s a noble effort to bring some standardization to the chaotic realm of generative AI, which has been thrown into healthcare spaces with a mixture of high hopes and crossed fingers.
