AI Startups Ride Record Funding Wave, But Sustainability Questions Loom
• Some see parallels between the generative AI hype and the crypto/Web3 craze, driven partly by investor FOMO. But AI has more tangible end-user applications.
• AI startups raised a record $22.4B in 2022, with massive rounds. High valuations let them attract top talent, even amid mass tech layoffs.
• Inflated valuations may be hard to sustain long-term. Investors expect a pullback once capital slows and some major players fail to deliver.
• Vertical AI startups with niche focus may fare better by demonstrating value in a specific domain.
• Those that survive the hype will need to show a clear path to profitability, unlike many crypto companies.