Artificial intelligence continues to be a hot industry despite a broader tech downturn, and the Bay Area is scooping up a lot of the funding particularly in the emerging space of generative AI.
Last year, venture capital firm dropped $4.5 billion on generative AI startups globally, down slightly from $4.8 billion in 2021, according to a recent report from PitchBook. The total number of deals made last year reached 269, slightly more than the 262 deals in 2021.
Companies building foundational models and infrastructure, which PitchBook calls AI Core, and natural language interfaces captured the greatest share of both funding and deals from 2018 to 2022, according to the report, with 46% of all deals and 62% of the value, combined.
Smaller sectors within generative AI include 2D media, 3D media, audio, biotechnology, code and vertical applications.
Andreessen Horowitz has been the most active investor in the space since 2018 with 21 total deals followed by Tiger Global Management and Sequoia, both with 20 deals. Amplify Partners and Khosla Ventures have each made 17 deals. Bloomberg Beta, Index Ventures and Soma Capital have each made 15 deals. And South Park Common and Alumni Ventures have made 14 deals each.
Globally, AI is expected to become a more than $15 trillion market in less than 10 years, according to PWC, and generative AI software alone is expected to more than $98 billion by 2026, according to PitchBook.
Here are the top 10 funded generative AI startups in the Bay Area, based on PitchBook data and other reports.
OpenAI (S.F.)
- Total Funding: $2.01 billion including a $1 billion grant in 2015 from Amazon Web Services, Elon Musk, Sam Altman, Peter Thiel, Reid Hoffman, Jessica Livingston, Y Combinator and Infosys. It also received a $1 billion equity investment from Microsoft in 2019. Its total funding is likely at least $4 billion, though. Microsoft alone has invested at least $3 billion in OpenAI since 2019, according to the New York Times, and the two companies announced a strategic partnership in January that is reportedly worth $10 billion over multiple years. OpenAI is also reportedly being valued at $29 billion.
Anthropic (S.F.)
- Total Funding: $1.3 billion including two separate rounds just this year that were each worth $300 million, and the company was most recently valued at $4.4 billion. Its investors include Google parent Alphabet and Spark Capital. Disgraced FTX CEO Sam Bankman-Fried also previously invested in Anthropic.
Inflection AI (Palo Alto)
- Total Funding: $265 million, though that figure could reach close to $1 billion soon. Inflection was co-founded by former LinkedIn CEO Reid Hoffman and is reportedly seeking an additional $675 million in funding. The company was valued at close to $1.23 billion last year. Its investors include Hoffman's Greylock Partners, Polaris Partners and The General Partnership.
Scale AI (S.F.)
- Total Funding: $603 million including a $325 million round in 2021 that valued the company at $7.3 billion. Its investors include Founders Fund, Index Ventures, Tiger Global Management, Y Combinator, Spark Capital and Coatue Management.
Adept AI (S.F.)
- Total Funding: $415 million including a $350 million round in March that was led by General Catalyst and Spark Capital, and valued the company at $1 billion.
Dialpad (San Ramon)
- Total Funding: $415 million since it was founded in 2011. The cloud-based phone system for businesses was valued at $2.2 billion in 2021 after raising $170 million. Its investors include Plug and Play, T-Mobile Ventures, Salesforce Ventures, Felicis Ventures, SoftBank Capital, GV and Andreessen Horowitz.
Grammarly (S.F.)
- Total Funding: $400 million, though it was valued at $13 billion after its last round in 2021. The writing assistant company was founded in 2009 and long-time CEO Brad Hoover will be stepping down at the end of April. Global head of product Rahul Roy-Chowdhury will take over as chief executive on May 1.
Anyscale (S.F)
- Total Funding: $260 million including a $199 million round in 2022 that was split between equity and debt and valued the company at just over $1 billion. Its investors include Andreessen Horowitz, Ant Group, Foundation Capital, Intel Capital, New Enterprise Associates and The House Fund.
Character Technologies (Palo Alto)
- Total Funding: $193 million including a $150 million round that was announced on Thursday and valued the company at $1 billion. Known as Character.AI, the chatbot software's investors include Andreessen Horowitz, GitHub CEO Nat Friedman, Color Genomics co-founder Elad Gil, SV Angel and A Capital.
Weights & Biases (S.F.)
- Total Funding: $200 million, though the software and data optimization company reportedly raised an additional undisclosed amount last year. It was valued at just over $1 billion in 2021, and investors include Nvidia, Felicis Ventures, Qualcomm Ventures, Insight Partners, Coatue Management, Gaingels, Hack VC, Bloomberg Beta, GitHub CEO Nat Friedman and Trinity Ventures.
