Generative artificial intelligence (GenAI) companies have become the major driver of unicorn startups, accounting for 60% of the new ones reaching a $1 billion valuation, according to a report from venture capital firm Accel.
In the last 12 months, funding for GenAI startups in Europe and Israel neared $1 billion, a sharp contrast to the over $14 billion invested in U.S. GenAI startups. This discrepancy is largely due to the substantial $10 billion funding injection into OpenAI, as highlighted in the report.
Philippe Botteri, a partner at Accel, explained during an interview, “A very limited number of companies have attracted a disproportionate amount of capital… the investment in foundational models will likely decrease.”
The report highlights that AI foundation models, developed by companies such as Microsoft-backed OpenAI and Meta, have the ability to generate various types of content in response to prompts.
Notably, Europe, which is home to GenAI startups like AI video avatar platform Synthesia and Stability AI, is currently producing 50% more AI publications than the United States, with similar citation rates.
Botteri predicts, “In the future, funding will shift more towards companies like Synthesia for application development, potentially leading to a more balanced ratio of two-to-one between the U.S. and Europe.”
The report also reveals that tech giants, including Microsoft and Nvidia, added a combined $2.4 trillion in market capitalization over the last 12 months, primarily fueled by the potential of AI.
Looking ahead, Botteri anticipates that specialized AI applications catering to fields like cybersecurity, healthcare, construction, and legal will gain significant traction.