PitchBook News - Tech giants take hold in AI

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The Research Pitch

November 25, 2023

Where top VCs invest: Our Emerging Tech Indicator analyzes early-stage deals made by a subset of top-performing investors. The most recent data suggests AI and biotech are garnering much interest. Read more.

UK Market Snapshot: The latest in our quarterly series on economic trends across European markets spotlights the UK, where hopes of a recovery have been sparked. Download the report.

Featured credit research: In this week's free LCD report for non-clients, our US Credit Markets Weekly Wrap covers why leveraged loan coverage metrics are exposing rising risk—and much more. Get the free research.

Generative AI mega-deals by tech giants compel VCs to react

OpenAI's leadership crisis demonstrated the indirect influence wielded by tech giants in the generative AI startup ecosystem.

Microsoft's CEO Satya Nadella helped broker an overhaul of the board to preserve Sam Altman as CEO, resulting in former Salesforce co-CEO and ex-Twitter chairman Bret Taylor's appointment as OpenAI chairman.

Tech giants have taken advantage of the simultaneous VC recession and generative AI boom to take a definitive position in the startup ecosystem, participating in deals contributing 89.7% of investment dollars to startups in the space this year.

As a result, VCs have ultimately been more discerning in deals without strategic investors than the talk of hype cycles would suggest.

Corporate investors are now a dominant force in AI deals.

Our research breaks out the investment data for companies in our generative AI market map, which is available to clients to explore early-stage leaders in the emerging space.

The data shows the concentration of deal activity growth in product segments like AI core and vertical applications, with flatter deal counts in multimedia domains as VCs weigh the merits of building on top of models like OpenAI's.

Deal value growth stands out in code and healthcare if not visual media and audio.

For more data and analysis, download the free research: Generative AI VC Trends

Feel free to reach out to discuss these topics and companies further.

Best,

Brendan Burke
Senior Analyst, Emerging Technology

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Industry & Tech Research

Clean energy tech companies raised $4.5 billion in VC funding in Q3, slightly down from 2022 levels.

Nonetheless, battery energy storage and hydrogen startups are still bringing in significant capital, according to our new Clean Energy Report.

Activity is being driven by federal funding boosts and investor enthusiasm to address the bottlenecks likely to arise during the energy transition:

read a free preview

Thematic Research

The Role Banks Play in Japanese Venture

The VC market in Japan almost had a big problem.

Many of the traditional venture firms don't have sufficient capital to support late- and growth-stage companies.

Bank-affiliated VC is way up in Japan.

Our latest analyst note explores how this void created an opportunity for a few groups of deep-pocketed investors—among them, Japanese banks:

read the free research

Market Updates

VC valuations in Europe have declined across the board compared to 2022.

The seed and late-stage categories, though, have experienced upticks in their respective median valuations.

Our new European VC Valuations Report illustrates how deal terms have evolved during the first nine months of the year, including possible signs of a recovery:

read the free report

Webinars & Events

Emerging Tech Talks: Space situational awareness with Digantara

As commercial space launches become easier and cheaper, space debris is becoming an increasing risk.

Space situational awareness is a growing sector within space tech to help protect assets in orbit.

On Dec. 5, we'll host executives from Bengaluru-based Digantara to discuss India's space startup scene along with current trends and challenges across the vertical:

Register here

In the News

Our insights and data featured in the press:

"Competitors have a window to pursue foundational breakthroughs that can surpass the Microsoft-OpenAI efforts." [LA Times]

The main driving force behind carbon capture overall is on the regulatory and policy side. [Tech Brew]

Down rounds in European VC have hit their highest levels since 2014. [Sifted]

For emerging VC fund managers in the US, this year's fundraising data hasn't looked all that bad. [TechCrunch+]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

More of our recent research (* - report preview):

Market updates

Thematic research

Industry & tech research

Credit research

Coming next week (subject to change)

US Public PE and GP Deal Roundup
Retail Fintech Report*
Medtech Report*
Technology and Fundraising Survey

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PitchBook News - Tech giants take hold in AI

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Early-stage startups' uphill battle

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