Shulou(Shulou.com)11/24 Report--

[guide to Xin Zhiyuan] the craze brought about by the big model has been less than a year, and many related startups are already facing serious problems.

According to a recent article in the Wall Street Journal, some venture capitalists have realized that the emergence of generative artificial intelligence and large models is not enough to stop years of entrepreneurial downturns.

In more than two months, the new craze triggered by ChatGPT will be a whole year away.

Although a large number of startups have sprung up in less than a year, some startups that showed enthusiasm for generative AI are now facing layoffs and declining user interest.

For example, as a generative artificial intelligence writing tool for writers and businesses, Jasper's user growth declined for the fourth month in a row in the year to July.

Although the company raised $125 million last fall and has been valued at $1.5 billion, it made a round of layoffs in July and lowered its revenue forecast for this year, according to people familiar with the matter.

Less than a year after the new artificial intelligence boom, many tuyere startups are already grappling with possible industry liquidation.

From the downturn to the best part, it is now "cooling". After a period of industry downturn, the release of ChatGPT once rekindled optimism among entrepreneurs and investors.

Now, as tech giants such as Microsoft and Google consolidate their dominance, investors are becoming more cautious, realizing that many startups are already in serious problems. there is growing uncertainty about the survival of a new wave of artificial intelligence startups.

As Mark Goldberger, a partner at Index Ventures, puts it: "at first, people in the venture capital community were optimistic that business artificial intelligence applications" would be implemented at the speed of light, but now "a shallow disillusionment trough" is forming, and the road ahead seems to be getting more and more blurred day by day. "

At the time, some voices from Silicon Valley declared that generative AI would usher in a new era of technology. Venture capital firms have also recruited a large number of new employees and said they will invest billions of dollars to support the unproven industry.

Goldberger said that the surge in the number of ChatGPT users in the early days of its opening led investors to greatly overestimate the speed at which consumers are using generative AI tools.

Before getting customers or revenue, investors rushed to support start-ups that developed these products, sparking and fuelling fears that the market might overheat.

Today, a large number of homogenized products have basically confirmed that it is difficult to "cash" artificial intelligence technology, the interest of users is leveling off or declining, and the hardware behind running these products has become extremely expensive. many start-ups can no longer afford such large expenses.

For generative AI, "cooling" may be a big key word now.

After the first few months of growth, monthly online visits to ChatGPT fell sharply in June and July, according to analytics platform Similarweb.

Similarly, data from analytics platform Sametime show that Midjourney's attractiveness has also flattened, with monthly traffic falling for the third month in a row in the year to July.

Synthesia, which just raised $90 million in June, has seen flat or declining user growth over the past six months.

The technology industry is still looking forward to AI, although the growth trend of various products has greatly slowed, but for Microsoft, Google and other giants, they are all investing heavily in new artificial intelligence products.

In particular, Nvidia's business is booming, and Q2's profits far exceed analysts' expectations.

Investors in start-ups say that while generative AI technology is still in its early stages, it will one day spawn a new generation of multibillion-dollar companies, as it did in the mobile internet era.

So far, however, the boom in artificial intelligence has not been enough to stop the sharp decline in venture capital.

Total venture capital in the United states plunged by nearly half in the second quarter, despite a 65% increase in investment in generative AI startups, systems focused on generating humanoid text, graphics, and code, to $3.3 billion, according to PitchBook.

Some investors say they are still unsure what a successful business model for developing new products around the technology should look like. Many companies have not yet demonstrated how they can retain users and develop products that existing technology companies cannot easily imitate.

In the case of uncertain business models, a large amount of data need to be obtained and analyzed to train large models, which may continue to cost the company tens of millions to billions of dollars, which is already a great burden for most start-ups that have not yet made a profit.

Given the uncertainty of the profitability path and fierce competition from deep-pocketed competitors such as Google and Microsoft-backed OpenAI, investors have become hesitant to fund such start-ups.

By contrast, OpenAI expects to generate $1 billion in revenue next year, at least partially offsetting the staggering cost of running ChatGPT.

So far, the largest artificial intelligence start-ups have sought most of the money from "financiers" who can provide computing power and other resources to train large models.

Microsoft is reported to have invested more than $10 billion in OpenAI, its competitor Anthropic has received hundreds of millions of dollars in investment commitments from Google, and Microsoft and Nvidia have helped Inflection AI raise $1.3 billion.

Although the future is still uncertain, several start-ups with golden spoons are always stronger.

Reference:

Https://www.wsj.com/tech/ai/ai-startup-buzz-is-facing-a-reality-check-e34babfe

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