However, there are signs that the AI bubble, particularly the generative AI segment, may be deflating. Recent reports show a decline in generative AI dealmaking for two consecutive quarters, with a 76% drop from its peak in Q3 2023. Surveys from Boston Consulting Group reveal that around half of C-suite executives do not expect significant productivity gains from generative AI and are concerned about potential errors and data compromises.
Key takeaways:
- AI Fund, an incubator started by AI expert Andrew Ng, plans to raise over $120 million for its second tranche, AI Venture Fund II, which has already amassed $69.75 million from 13 partners.
- Andrew Ng, the founder of Google Brain and co-founder of Coursera, launched the AI Fund in 2018 with $175 million, aiming to provide seed and series A funding for AI startups.
- Despite the planned $120 million for AI Venture Fund II being smaller than the first tranche, it is more than double what Ng reportedly hoped to raise initially, suggesting a potential deflation of the AI bubble.
- Generative AI dealmaking has declined for two consecutive quarters, with VC deal value for pre-seed and seed-stage deals falling to $122.9 million in Q1 2024, down from a high of $517.7 million in Q3 2023. This decline is attributed to enterprise reluctance and concerns about the potential for mistakes and data compromises.