- Investors have begun throwing money into the generative AI space.
- Entrepreneurs are encouraged to look at generative AI as a tool to solve a myriad of problems.
- This year will be the year new ways of using generative AI will thrive.
As ChatGPT goes viral and “generative AI” becomes a buzzword, many VCs are anxious to invest in the space.
If the early 2010s was the era of startups with the elevator pitch of “It’s like Uber, but for (fill in the blank),” we may be entering the era of founders explaining why their companies as like ChatGPT, but for, well, everything.
The content creation firm Jasper uses the tech behind ChatGPT, and raised $125 million in a Series A in October, valuing the company at $1.5 billion. Jasper competitor Copy.ai, which uses ChatGPT for marketing, raised $11 million in Series A in October 2021.
There’s generative AI for healthcare, with startups like doctor-focused Atropos Health, and synthetic healthcare data firm Syntegra all raising funding within the past 12 months. AI-enabled video editing startup Runway raised a $50 million Series C in December, while AI-enhanced design Creative Fabrique raised $61 million in January 2023. In education, there’s AI-generated teaching feedback startup TeachFX, which raised $10 million in September, and AI-enhanced textbook company Prof Jim with a $1 million seed round in January 2022.
And there’s plenty more to come, said Lux Capital partner Grace Isford.
“We’re at an exciting inflection point for AI — we’re just at the tip of the iceberg for the many vertical uses cases for large language models beyond the creative industries to spaces like biology, manufacturing, and healthcare,” Isford said. “We’ll likely get to the point where AI will be seamlessly integrated into daily workflows.”
The beauty of recent generative AI models is that they are available for other companies. OpenAI, the operator of ChatGPT and DALL-E, works with Jasper, Copy.ai, and mental health startup Koko, among others.
A flood of new companies
As access to generative AI models becomes easier, founders can spin up their “ChatGPT, but for plant lovers” idea much faster than before. For many investors, that’s a good thing. They believe generative AI can become as ubiquitous as the cloud or the internet.
But down the line, there’s a risk that startups will be using ChatGPT for ChatGPT’s sake. Not all generative AI companies have longevity, and not all sectors have problems that generative AI can solve.
When Uber began its rise, suddenly, there was an Uber for pets — pet and human ride-hailing app SpotOn — and an Uber for groceries such as Getir, but only a few became as successful or transformative as Uber.
For now, investors are confident their bets in generative AI will pay off, said Josh Constine, partner at Signal Fire.
“As with most trendy sectors, there are companies that are or will be worth much more, and many more that will never live up to their hype,” Constine said. “But unlike some past cycles where utility felt speculative or at least many years away, we’re 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 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 as every company: consistent revenue and profits. But for the time being, being buzzy is enough.