The week's developments in investing & technology, explained | 06.06.24

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What goes up must come down, even in the world of AI. GenAI dealmaking at seed stages has declined for two consecutive quarters, dropping a staggering 76% from its Q3 2023 peak according to pitchbook data. Investors are taking a breather and reassessing after the initial rush of capital into the space — but is this a sign of a cooling trend?

Elsewhere, we take a look at why fintech upstarts are failing to unseat UK banks, OpenAI goes B2B, and the wild AI shares market.

Read these stories and more below — in our CogX must reads.

— Charlie and the Research & Intelligence Team

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The investment ecosystem

📉 GenAI seed funding drops 76%:  The release of free generative AI tools by OpenAI has made some startups obsolete, and investors are demanding a clearer path to profit before putting their money behind new ventures.

📱 Why fintech upstarts have failed to unseat UK banks. While digital banks like Monzo and Revolut made banking easier with mobile-friendly apps and features, most haven't been able to turn a profit yet. In the meantime, traditional banks have responded by upgrading their own digital services, making it harder for newcomers to compete.

🤖 It’s a wild time for AI shares: Small investors are banding together to buy into hot AI startups like Anthropic and OpenAI through SPVs. Whilst it’s commonly been a tough market to crack, these outsiders seem to be finding a way in.

Chart of the week

CFOs prioritise maintaining strong risk management, especially with AI in finance: More than half worry about AI's impact on risk and compliance, according to a recent Deloitte survey.

How AI is transforming investing 

🏦 EU watchdog says banks must take full responsibility when using AI. Banks and investment firms in the EU must prioritise customer protection and uphold boardroom responsibility when deploying AI technologies, according to the bloc's securities watchdog.

🤝 OpenAI goes B2B: OpenAI has signed 100K PwC workers to ChatGPT’s enterprise tier, making the consulting giant its biggest customer and first resale partner. This tier offers businesses faster interactions, unlimited usage, and more customisation options.

💸 Only Big Tech can afford the price tag for training data: GenAI models are constantly hungry for more data, and with good reason – the more data they're trained on, the better they perform. But this data comes at a hefty price, one that only big tech companies can seemingly afford.

🔐 Vinod Khosla, Marc Andreessen, and the billionaire battle for AI control. Billionaire investors of the internet era are now locked in a war of words and influence to determine AI’s future. The stakes? Nothing less than economic power and global influence. 

Startups

💰 Steve Jurvetson’s Future Ventures targets AI with $169M fund. While the firm already invests in various cutting-edge technologies and has backed companies like SpaceX and Tesla. This fund is the first with a specific AI focus.

🪃 The Rise of the Boomerang Founder: Fueled by lower costs, better quality of life, and a desire to be closer to family, experienced founders are returning home to launch businesses. They're finding success by leveraging their international experience and local connections.

Jobs

• Senior Investment Consultant | SSV Capital PLC | London | £100k

• Associate | RBC | US | $130 - $175k

• Investment Associate | Playground Global | US | $150 - $200k

• Deputy Head of Compliance | Michael Page | UK | $120 - $140K

Noteworthy deals

• Yondr, an Amsterdam-based operators of hyperscale data centres has raised $150m in debt funding from the International Finance Corporation.

• Cloover, a Stockholm-based software platform offering financial services for the renewable energy sector has raised $114m in seed funding led by Lowercarbon Capital.

• EthonAI, a Switzerland based AI manufacturing startup has raised $16.5m in series A funding led by Index Ventures.

• Iris.ai, a Norwegian-based company developing LLMs for scientific research, has raised €7.6m in funding led by Silverline Capital.

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Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.