"Big Tech outspends venture capital firms in AI investment frenzy" 29 December 2023

Big tech companies have vastly outspent venture capital groups with investments in generative AI start ups this year, as established giants use their financial muscle to dominate the much-hyped sector. Microsoft, Google and Amazon last year struck a series of blockbuster deals, amounting to two-thirds of the $27bn raised by fledgling AI companies in 2023, according to new data from private market researchers PitchBook...

...Building and training generative AI tools is an intensive process, requiring immense computing power and cash. As a result, start-ups have preferred top artner with Big Tech companies which can provide cloud infrastructure and access to the most powerful chips as well as dollars...

...“Even the world’s top venture investors, with tens of billions under management,can’t compete to keep these AI companies independent and create new challengers that unseat the Big Tech incumbents,” said Patrick Murphy, founding partner at Tapestry VC, an early-stage venture capital firm...

...VCs are not absent from the market, however. Thrive Capital, Josh Kushner’s New York-based firm, is the lead investor in OpenAI’s employee stock sale, having already backed the company earlier this year. Thrive has continued to invest throughout a downturn in venture spending in 2023...