Silcon Valley is Cutting Checks for Generative AI...But Why?

In a bright spot for an otherwise lackluster funding environment, two “gen tech” companies became unicorns this week after Stability AI, the company behind the wildly popular image generator Stable Diffusion, and Jasper, which makes an AI-powered system that writes marketing copy, both announced funding rounds. The launch party for Stability AI drew people like Sergey Brin, Naval Ravikant, and Ron Conway into San Francisco for “a coming-out bash for the entire field of generative A.I.,” as The New York Times called it.

The buzz spilled over onto Twitter when a market map of companies in the space went viral after Sequoia partner Sonya Huang laid out the companies (including Stability AI and Jasper) that are building in generative AI, solidifying the space as a sector and not just a handful of companies making fanciful images.

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OK, these models are not only going to be super interesting things that we can play with to make a fun image, but they’re actually going to drive the future of how we work and the next big application companies.”That was probably a new framing that people hadn’t really thought about in that way. Those are probably a couple of the reasons it took off, but it’s speculative. I don’t know what makes things go viral on Twitter. I’m not good at Twitter. [Laughs] – Sequoia partner Sonya Huang

Social media has lately been overrun by stunning and strange images generated by AI, thanks to advances by Hugging Face and others. Related machine learning technology allows algorithms to generate reams of surprisingly coherent text on a given subject. A few of what are now styled as generative AI companies have collectively raised hundreds of millions of dollars, spurring a hunt for a new generation of AI unicorns.

Once technology becomes available for people to play with, it is very natural for step one to be very cool demos of what’s possible. I almost compare it to when the iPhone came out: It was a bunch of really gimmicky stuff that came out at first, but then you’ve got people who are really thinking about the business applications in deep ways, and we’re starting to see that. – Sequoia partner Sonya Huang

Stability AI, which offers tools for generating images with few restrictions, held a party of its own in San Francisco last week. It announced $101 million in new funding, valuing the company at a dizzy $1 billion. The gathering attracted tech celebrities including Google cofounder Sergey Brin.

The race is now on to find the applications of generative AI that will make a mark on the world. One of the early successes is Microsoft’s Copilot, which can write code for a given task and costs $10 per month. Another is Jasper, which offers a service that auto-generates text for companies to use in blog posts, marketing copy, and emails. Last week, the company announced that it had raised $125 million in funding from investors that valued the company at $1.5 billion, and claimed to be on track to bring in $75 million in revenue this year.

Generative AI enthusiasts predict the technology will take root in all kinds of industries and will do much more than just spit out images or sentences. David Song, a senior at Stanford University who is tracking the boom, has collated a list of over 100 generative AI startups. They’re working on applications including generating music, game development, writing assistants, customer service bots, coding aids, video editing tech, and assistants that manage online communities. Guo has invested in a company that plans to generate legal contracts from a text description—a potentially lucrative application if it can work reliably.

For Full Article: AI’s New Creative Streak Sparks a Silicon Valley Gold Rush
Investors have got the hots for “generative AI” that can make text and images. But so far, the hype runs ahead of the business results.