AI craze is distorting VC market, as tech giants like Microsoft and Amazon pour in billions of dollars
Summary
Chip Hazard, co-founder of early-stage firm Flybridge Capital Partners, says investing dollars are shifting "up the stack" and that "enduring companies will be built at the application layer." "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. In July, rival startup Cohere, which focuses on generative AI for enterprises, announced a $500 million funding round from investors including AMD, Salesforce , Oracle and Nvidia that valued the company at $5.5 billion, more than doubling its valuation from last year. Michael Harris, global head of capital markets at the New York Stock Exchange, told CNBC recently that NYSE is in dialogue with "a number of AI-focused companies" and said that, "as the industry evolves wed expect that pipeline to continue to build." "Unless there is a dramatic shift in market sentiment, I would be hard-pressed to see why these AI startups would put themselves in the public spotlight when they can keep growing privately at such favorable terms," said S&Ps Incera.
