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Meanwhile, 65% of Y Combinator's summer cohort are building tools around AI
Whenever a new technology comes along and becomes the hot new thing, there's a danger of oversaturation and burnout. Earlier this year you couldn't go even a few minutes without hearing someone talking or writing about generative A or, more specifically, ChatGPT (we were guilty of this ourselves). The question was, would this be a flash in the pan or something that would actually have staying power and become transformative?
So far, at least, the answer is the latter: the true test for any technology is not only when the major tech companies start latching on, and many of them have been releasing their own versions of ChatGPT, but when startups do so as well. According to data from PitchBook, they've been doing exactly that.
In the second quarter of this year, there was $280.64 million invested across 48 seed stage deals alone in the generative AI space, nearly doubling the amount of money from the previous quarter, while the number of deals rose 33% in that time.
Looking back to the same quarter the year before, the amount of funding rose 121%. However, interestingly, the number of deals didn't rise a significant amount, going from 42 to 48, indicating that investors are now putting more money into the companies they fund.
It's not just venture capitalists that are taking an interest in generative AI: as PitchBook also noted, over 65% of Y Combinator's summer cohort, meaning 134 startups, are building tools around AI. These companies will be the next generation to go looking for seed deal funding and if these numbers are any indication they should have no problem finding it.
Generative AI seed funding rounds
Some of those startups in the generative AI space that have raised funding this year, not limited just to the second quaryter, include Vellum.ai, a prompt engineering startup that raised $5 million; sports analytics company SportsVisio, which raised $3 million; and basys.ai, which uses generative AI to transform prior authorization, raised $2.4 million.
Others includes productivity startup Dust, which raised $5.5 million; Portkey.ai, which help clients build with generative AI, raised $3 million; Floworks, developer of a chatbot designed to make knowledge workers more productive, raised $1.5 million; Atomicwork, a company looking to add AI to the employee experience, raised $11 million; and Context.ai, a platform providing insight into user behavior to developers, raised $3.5 million.
(Image source: ibm.com)
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