Is Calif. AI bill part of a 'doomer' agenda?

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The Weekend Pitch

September 8, 2024

Presented by Arcesium

(Jenna O'Malley/Pitchbook News)

California's AI safety bill has proven the axiom that politics makes strange bedfellows.

Former US House Speaker Nancy Pelosi, US Rep. Ro Khanna (D-Calif.), Andreessen Horowitz and OpenAI, to name a few, all are united in opposition against California’s SB 1047, a first-of-its-kind legislation that would impose safety mandates for large language models that underpin generative AI applications like OpenAI’s ChatGPT and Anthropic‘s Claude.

Proponents of the bill include Anthropic, Elon Musk, The Center for AI Safety, as well as academic researchers Geoffrey Hinson and Yoshua Bengio, who have been dubbed the “godfathers of AI.” They contend that the bill offers a “light touch” and that it’s better to get ahead than wait for something bad to happen.

SB 1047 has laid bare the divisions within the AI community. OpenAI’s CEO and co-founder Sam Altman opposes the bill despite advocating for AI regulation on the federal level. The bill passed shortly before a $1 billion round for Safe SuperIntelligence, the new AI safety startup founded by former OpenAI researchers Ilya Sutskever and Daniel Levy.

These are major sticking points of the legislation: A mandate that companies training large language models costing more than $100 million must develop and implement safety audits and build a shut-off switch for their models. The mandate also applies to models that cost $10 million or more to fine-tune. Most controversially, the bill imposes civil liability on developers for any harm their models cause.

The bill sailed through the state Legislature and now sits on the desk of Gov. Gavin Newsom, who could still veto amid a mounting pressure campaign.

I'm Jacob Robbins, and this is The Weekend Pitch. You can reach me at jacob.robbins@pitchbook.com or on X @JacobERobbins.

I spoke to AI investors to understand the opposition to SB 1047, which some venture investors and founders see as premature, unscientific and part of a "doomer" agenda to limit tech.

Trivia

OpenAI CEO Sam Altman (Patrick T. Fallon/Getty Images)

News broke this week that OpenAI is in talks with Thrive Capital and others to raise a new round of funding that would value the startup in excess of $100 billion. It's a club very few startups have ever joined. Which startup has NOT surpassed a $100 billion valuation?

A) Shien
B) SpaceX
C) Ant Group
D) Uber

Find your answer at the bottom of The Weekend Pitch!

How blockchain
could transform insurtech

As insurtech investment remains muted, integration with blockchain technology may herald new opportunities for investors, according to our latest Emerging Tech Research.

VC dealmaking in the sector rose to $1.2 billion across 106 deals in Q2—increases of over 27% and nearly 4%, respectively, but PE and M&A activity continued to slow. The report also covers how blockchain technology, a digital ledger that records transactions across decentralized networks, could help with fraud prevention, risk management and more.

UK private markets eye recovery
at political turning point

Both venture capital and private equity deal activity are showing signs of recovery in the UK, according to our latest UK Private Capital Breakdown. On the VC side, large deals in the AI and fintech verticals have helped drive investment activity, while PE transactions have been buoyed by an interest-rate cut that has spurred LBO activity.

The report comes at a pivotal time for the UK. Not only did the Bank of England make its first rate cut of 25 basis points, but a new Labour government is taking the reins, promising both ambitious infrastructure investment and a potential change to how capital gains are taxed.

Though the deal pipeline remains strong, there are other headwinds. Exits have been disappointing for both VC and PE investors, and while this has not stopped the UK’s largest PE mega funds from securing commitments, VC fundraising in the country is lagging that of Europe.

Stay tuned

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

Q2 2024 Foodtech Report
Q2 2024 UK Snapshot
Q2 2024 Global Private Market Fundraising Report
Q2 2024 Mobility Tech Report
Q2 2024 Healthcare IT Report
Q2 2024 US PE Lending League Tables

Quote/Unquote

"Honestly, I find it a little bit silly that people think this thing can become God. This is technology. We do know how it works."

—Sharon Zhou, co-founder and CEO of the AI model fine-tuning startup Lamini, talking to PitchBook about her opposition to California's new AI safety bill, SB 1047.

Trivia

Answer: D.

Uber never surpassed a $100 billion valuation while Shien, SpaceX, and Ant Group all have. Read more about the rough road OpenAI faces to reach a $100 billion valuation.

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

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