SoftBank and Bessemer Venture Partners boosting investment in AI-focused firms, Metaverse market

TechInsight360
TechInsight360

 

Ever since OpenAI launched the generative AI tool in the form of ChatGPT and Microsoft invested US$10 billion to take up the competition with Google, artificial intelligence has emerged as a hotbed for tech giants. From Meta to Google and Tencent, everyone is jumping on the AI bandwagon to drive the next growth phase for their businesses. Now, global investors such as SoftBank Group and Bessemer Venture Partners are also seeking to increase their investment in the area ofartificial intelligence, while also trying to improve their financials through these investments.

  • In H2 2023 and H1 2024, SoftBank Group is eyeing significant investment in the area of generative AI. The announcement comes at a time when the firm had continued to post an annual net loss for the second straight year in fiscal 2022. The growth of the firm has been significantly affected by the slowdown in the global market, denting its shareholdings.

For fiscal 2022, the firm posted a net loss of US$7.2 billion. As part of its strategy to improve its balance sheet, the firm has sold nearly all of its stake in Alibaba and is now targeting investment in the AI sector. The decision to invest in the generative AI sector is part of the Japanese firms' strategy to tap into the growing popularity of ChatGPT, which has gained widespread popularity over the last few months while improving the financials of the firm.

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SoftBank Group isn’t the only global investor seeking to tap into the fast-growing AI market. Bessemer Venture Partners, in May 2023, alsoannounced that the firm is planning to invest US$1 billion in AI-focused startups. The firm is expecting generative AI technology to create an entirely new category of business. It also revealed that the future will not have legacy competitors, which include copywriting firms like Jasper and image-generation businesses such as Midjourney.

Other venture capital firms have also increased their focus on AI-focusedstartups. Sound Ventures, for instance, announced a US$240 million fund dedicated to AI-based firms in May 2023. Lux Capital announced a similar US$1.15 billion fund with AI as the focus area. The venture capital arm of Salesforce also unveiled a US$250 million AI fund.

Since announcing the US$240 million fund for an AI-focused firm in May 2023, Sound Ventures has already invested half of that in three companies. OpenAI, Anthropic, and Stability.AI are the three firms that have received investment from Sound Ventures. Notably, venture capital is planning to invest only in six AI-focused firms in total.

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Anthropic, which is a rival of OpenAI, also received significant investment from Google which is seeking to take on Microsoft in the AI race. In Q1 2023, Google invested US$300 million in Anthropic to boost its presence and capabilities in the artificial intelligence sector.

Even though Anthropic and OpenAI are a competitor to each other, Sound Ventures invested in both firms. This shows how significantly venture capital and private equity firms are betting on generative AI technology. Going forward, TechInsight360 expects more venture capital firms to increase their investment in the AI segment, as the technology continues to disrupt many businesses and industries worldwide.

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