US Big Tech Becomes Largest Investor in AI Startups, Surpassing VC Investment Amounts

Market Research Firm PitchBook Survey
Big Tech and AI Startups Account for 70% of This Year's Funding

More than two-thirds of the funds raised by artificial intelligence (AI) startups this year came from big tech companies such as Microsoft (MS), Google, and Amazon. Amid the ChatGPT-driven AI boom, big tech is increasing investments based on their massive capital power, aiming to dominate the AI industry.

[Image source=AP Yonhap News]

On the 26th (local time), major foreign media outlets cited market research firm PitchBook, reporting that among the $27 billion (approximately 34.95 trillion KRW) raised by new AI companies this year, investments from MS, Google, and Amazon accounted for two-thirds of the total.

These big tech companies significantly increased AI investments following the ChatGPT craze, a generative AI released by OpenAI in November last year. In contrast, traditional Silicon Valley investors, venture capitalists (VCs), drastically reduced spending due to high interest rates and declining valuations of previously invested companies. As a result, big tech has surpassed VCs to become the largest source of funding for AI startups.

MS, the largest shareholder of OpenAI, is a representative big tech company that has steadily increased investments in AI startups. MS invested $3 billion (approximately 3.88 trillion KRW) in OpenAI last year, added another $10 billion (approximately 12.94 trillion KRW) earlier this year, and poured $1.3 billion (approximately 1.68 trillion KRW) into Inflection AI in June.

As big tech’s investment expansion drives up the corporate value of AI startups, some analysts say it has become more difficult for VCs to invest in startups. OpenAI’s corporate value is currently estimated at $86 billion (approximately 111.32 trillion KRW), which is three times its valuation earlier this year.

Patrick Murphy, partner at early-stage venture firm Tapestry VC, said, "Even the world’s top venture investors managing hundreds of billions of dollars find it difficult to compete with big tech to keep AI companies independent and create new challengers to displace big tech." He added, "Potential companies that could emerge from the AI platform shift have already been absorbed by big tech."

This content was produced with the assistance of AI translation services.