PitchBook News - AI safety takes a back seat

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The Weekend Pitch

June 2, 2024

Presented by Masterworks

xAI CEO Elon Musk, OpenAI CEO Sam Altman and Alphabet CEO Sundar Pichai (Joey Schaffer/PitchBook News)

The dream of prioritizing AI safety is quickly fading. Over the past month, leading model developers have seen safety experts scatter, competition heat up and public trust shatter through unforced errors.

This week, OpenAI installed a new safety team, one that includes CEO Sam Altman, after the old team jumped ship. Jan Leike, who previously led the ChatGPT maker's "superalignment" team with Ilya Sutskever, just landed at rival Anthropic.

Leike said on X earlier this month that he'd reached a "breaking point" with OpenAI's leadership, which he said prioritized "shiny products" over safety. The internal dispute dates back to Altman's brief ouster late last year and has damaged OpenAI's image as an AI safety evangelist.

But the challenges to AI safety go far beyond OpenAI's power struggles. Makers of large language models are finding they have no choice but to sideline long-term safety concerns as they put out fires and deal with competition.

Elon Musk's xAI got $6 billion at a $24 billion post-money valuation this week, providing fresh evidence that market forces are still dumping fuel into the engine of progress—and that there will be no consolation prize for moving slower but safer.

And embarrassing recent missteps by Google and OpenAI show that LLM developers must deal with near-term risks before they can hope to tackle existential ones.

This is The Weekend Pitch and I'm James Thorne. You can reach me at james.thorne@pitchbook.com or on X @jamescthorne.

Trivia

The medtech vertical rebounded in Q1 2024, increasing VC deal value 20.1% from the previous quarter. How much VC funding did medtech raise in Q1 2024?

A) $2.8 billion
B) $4.6 billion
C) $3.3 billion
D) $1.9 billion

Find your answer at the bottom of The Weekend Pitch!

PE giants search for greener pastures

(Mikkelwilliam/Getty Images)

The largest publicly traded PE firms generated strong fund inflows year-over-year, driven primarily by private credit. However, the weak exit environment carried into 2024, impacting realizations in buyouts and other core PE strategies, our Q1 2024 US Public PE and GP Deal Roundup finds.

Firms continue to flock to private credit, which drew 69.8% of fund inflows.

Private wealth and insurance remain major fundraising channels, after accounting for an estimated 47.8% of credit fundraising in 2023.

Why economic growth doesn't equal a buyout boom

(Sergey_Nivens/Getty Images)

The tailwinds that have propelled buyout fund performance over the past decade will die down in the coming years. While buyout dealmaking rebounded slightly at the beginning of the year, activity remained below its historical average, where it's likely to remain until interest rates come down.

Our latest Quantitative Perspectives report breaks down how strong economic growth, low unemployment and above-target inflation have diverted the Federal Reserve's focus away from lowering interest rates, a development that has a material impact on the buyout market.

Survey: Signs of increased optimism in VC

(Eoneren/Getty Images)

Overall, venture GPs are more optimistic about fundraising and the IPO market than they were a year ago, according to our H1 2024 Tech Survey analyst note. GPs are mostly expecting asset valuations to get more attractive over the next month—which is supporting market activity, though still at subdued levels. While AI remains a top area of focus, investors have expressed concern of overinvestment.

Interest rates remain a key determiner of market activity, as well as the need for founders to temper their valuation expectations. While several managers have pushed out fundraising plans or ruled out opening another fund, the majority cited no changes to current fundraising plans.

Quote/Unquote

"We believe that if government entities use political pressure to substantially change the composition of the board of directors of a private company, a dangerous breach in the wall separating public and private spheres will occur."

—Excerpt of a letter from a group of officials to money managers at BlackRock, Goldman Sachs and JP Morgan expressing support for Exxon Mobil's board of directors despite investor pushback. You can read more about the pressure from investors and results of Exxon's annual meeting here.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

April 2024 Global Markets Snapshot
Q1 2024 France Snapshot
Q1 2024 Biopharma Report
Analyst Note: Recapping the MedCity INVEST Healthcare Conference
Analyst Note: SynBioBeta 2024 Recap

Trivia

(Andresr/Getty Images)

Answer: C)

In Q1 2024, medtech generated $3.3 billion in deal value, up from the previous quarter's total of $2.8 billion. You can read more about the space, what's driving the rebound and new investment opportunities here.

This edition of The Weekend Pitch was written by James Thorne and Jacob Robbins. It was edited by Ron Prichard.

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PitchBook News - AI safety takes a back seat

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