Unlike past tech booms, this one is getting funded by tech companies like Microsoft, Amazon and Nvidia, rather than traditional venture firms.
Tech giants have more than money. They're also throwing in tangible benefits like cloud credits and business partnerships, packaging the types of incentives that VCs can't match. According to Forge Global, which tracks private market transactions, AI as a percentage of total fundraising jumped from 12% in 2023 to 27% so far this year. The average round for AI companies is 140% bigger this year compared to last, the data shows, while for non-AI companies the increase is only 10%.
"Managers are having a difficult time raising additional funds without delivering LP returns, especially because more liquid, lower-risk investments now have attractive yields thanks to high interest rates," PitchBook wrote in its August report. It's"very challenging for VCs to be promising any exits right now, given the market conditions," Owyang said, adding that early-stage investors may not see returns for seven to 12 years on their newer bets. That's for their companies that ultimately succeed.that it was raising a so-called special purpose vehicle — called Menlo Inflection AI Partners — as part of a $750 million funding round in Anthropic in a deal that valued the company at.