In 2024, during a special week of the Term Sheet newsletter.
Funding: Gen AI Estimates
At least one AI startup will raise a major funding round before investors realize that the company has no real humans and that the founder is a robot. – Ivan Javeria, Partner at Gunderson Dettmer
Next year will be a year of reckoning for Gen AI. As the novelty factor fades for tourist investors, early adopters who raised revenue multiples in the hundreds or thousands may go bankrupt or be acquired at fractions of their value, while the few obscure ones that find a real product that meets the new market needs will become the new monopolies. – Pegeah Ebrahimi, Co-Founder and Managing Partner at FPV Ventures
Due to the exaggerated expectations and large budgets allocated for AI in 2023, we will witness a significant transformation among AI companies in 2024 as companies shrink their experimental AI budgets. Many companies will face slowing growth and increased cash burn as they try to define business models, including pricing, and deep AI use cases in the market. Companies that continue to grow and thrive will find measurable ROI cases and ensure deep integration into current workflows. – Kathy Gao, Partner at Sapphire Ventures
2023 was the first year in the current AI cycle and I expect it to last about 9 more months. In every technology hype cycle – whether it was mobile phones in 2009 or fintech in 2021 – there is an early period where there is a flood of investment, fear of missing out, and everyone gets massive valuations. But after a few years, many of those companies don’t grow as fast as you hoped. Everything starts to feel busy and you feel disappointed. – Emad Akhund, Co-Founder and CEO of Mercury
AI-related companies will continue to be the bulk of what we see next year. – Aaron Jacobson, Partner at NEA
2024 will be cold for many of the hot AI startups, as cautious venture capital firms will question how many actual winners there are in the productive AI market and will cut back on investments in cash-burning companies. – Kris Mitinco, Senior Correspondent at Crunchbase News
In 2024, over $200 billion will be spent on running AI infrastructure, as large and emerging companies continue to have a strong demand for smart computing. – James Lu, Partner at CapitalG
Replacing Humans?
The majority of Gen Z will have at least one AI-generated friend or best friend that discusses daily content. Online friendships through Discord, Twitter, Twitch, Roblox, etc., will prepare the young generation to maintain relationships with people they have not met face-to-face, and the retention rate with AI friends will be higher as these partners will cater to each person’s interests and emotions specifically. These relationships will primarily be text-based but will eventually evolve to include voice and perhaps video in the future. – Lindsey Lee, Investor at Bessemer Venture Partners
AI will not take our jobs or dominate us, but people must begin to accept automation. Personal AI agents will evolve and adapt, but instead of being all-knowing, they will serve as tools that act as unconscious assistants alleviating humans from boring tasks. – Michael Stewart, Partner at M12
On
despite warnings that GenAI and other smart programs will slowly – or not slowly – take jobs from human developers, the industry should instead expect to see more jobs requiring extensive expertise in backend developer roles. Every vendor around the world is trying to enhance their security solutions to combat AI attacks, and trusted developers will become essential in implementing strategies that ensure the least number of security vulnerabilities. The anticipated benefits of LLMs – such as the ability to use natural language instead of programming languages – will not be ready for companies in the next 12 months, so businesses need skilled developers to successfully implement DevSecOps. – Eyal Mamo, VP of Engineering at Crowdstrike
The hype around Gen AI being a magic solution that will disrupt every process as we know it will not materialize. Productive AI excels at many things, such as gathering data, analyzing it, and generating new insights from that data. Many existing digital companies provide the necessary infrastructure for AI to thrive, and thus some processes can be more efficient with AI. However, there will be many use cases that still need to prove that GenAI will move the needle. – Simon Wu, Partner at Cathay Innovation
Many will realize that there is a technological gap between what AI can do today and what we hope it will do in the future. – Rob Rockert, Partner at Sorenson Capital
The next big thing?
The size of large language models will shrink. Models will be trained specifically for certain domains on smaller datasets and will outperform general language models. Similarly, emerging architectures that reduce model size, such as liquid neural networks that dynamically adjust the model size by reducing tasks and dropping incorrect information, will open new and exciting use cases for deep learning. For example, in the manufacturing industry, many on-site devices lack the processing power to run complex machine learning models, but smaller models that can run on such devices will unlock new edge computing possibilities. – Roudina Sisari, Founder and Managing Partner at Glasswing Ventures
In 2024, expect a clearer distinction between the real applications of AI and technologies marketed as AI. The true measure of AI success will be its ability to address customer challenges and tackle core business issues. Platforms and applications that excel in these areas will win the market by solving business problems in ways that were previously impossible. – Meg Gautam, Chief Product Officer at Crunchbase
The bypassing of core enterprises to foundational AI model providers, like ChatGPT, will be challenged by open-source counterparts, starting with a tectonic shift in the market. The existing value for stakeholders in established enterprises will be destroyed, and the value consumers gain will be immense. – Richard Dulude, Co-Founder and Partner at Underscore VC
In 2024, we will witness a transition from smart gaming (products leveraging the latest technology) to native AI products (products using AI to solve long-standing human needs in innovative ways). – Jacob Andrew, Partner at Greylock
Productive AI will make social media platforms social again. Large social media platforms have become virtual entertainment hubs at the expense of actual social interaction, and strangely enough, AI could change all of that. You don’t need to be an expert in drawing, painting, or singing to express yourself stylishly. Anyone can have a creative idea and use AI to bring it to life. This ease of creativity will encourage more expression, storytelling, and interaction, fostering a new generation of social media platforms. “Look what I made” is the new “What’s on my mind.” – Ashley Lundstrom, Partner at EQT Ventures
As the AI landscape continues to develop, the ongoing challenges and opportunities will keep shaping the industry in ways we are only beginning to understand.
The spread of artificial intelligence is leading to increased demand for computing power and storage space, not to mention energy. In 2024, I expect to see more innovations in data centers, with opportunities for companies that can improve network efficiency, access alternative energy sources, and find better ways to cool the immense heat generated by graphics processing units. – Erin Price-White, Partner at Index Ventures
Big Dogs
With emerging learnings in foundational neural network architectures that led to the transformer model and dominance by OpenAI, it is likely that their upcoming release of GPT-5 will be surpassed in specific performance metrics by a new competitor in the market, based on more efficient architectures, enhanced multimodal capabilities, and a better contextual understanding of the world and improved transfer learning. These new models will be built on emerging research in spatial networks and graphical structures, combined with various neural networks that will lead to more efficient, flexible, and powerful capabilities. – Ethan Batraski, Partner at Venrock
We hear a lot about the players competing for leadership in artificial intelligence, but the real sleeping giant is Meta. Meta’s generative AI capabilities, supported by billions of diverse social data points including images, videos, and texts, will outpace Google and OpenAI in the AI race. They understand how humans truly interact with one another, and by leveraging their global platform as a launch pad, Meta has the potential to revolutionize the daily landscape, bringing AI to any moment that can be imagined. They are well-positioned to be at the forefront of widespread adoption, as AI seamlessly integrates into the fabric of every home. – Alex Beckman, Founder and CEO of On Platform
Google, Meta, and Microsoft will continue to increase revenues, but they will have about 10% fewer employees five years from now as AI-driven productivity improvements absorb growth and take over support, marketing, development, and managerial roles. At the same time, slow revenue growth rates will drive campaigns to find efficiencies in operating expenses. – Mark Sherman, Managing Partner at Telstra Ventures
Amazon will launch AI-powered search. The AI revolution in online search, such as through ChatGPT and Microsoft Bing. One of the largest online search engines is Amazon.com, which is the fifth most browsed website in the United States and may be the de facto shopping engine in the U.S. Expect Amazon to integrate generative AI into its search bar soon, allowing shoppers to visit Amazon not only for shopping but also for inspiration and getting answers for daily inquiries. – Bob Ma, Investment Director at WIND Ventures
Ethics and Safety
Generative AI will be used to promote misinformation about U.S. elections, forcing regulators to act before the problem is fully understood, leading to a reactive legislation that is always too late and significantly ineffective. – Graham Brooks, Partner at .406 Ventures
With more than 1 in 3 Americans avoiding going places due to fears of gun violence, we will see a clear divide between companies that succeed and those that do not in applying AI to facilitate our lives and make them safer with a focus on public needs. – Peter George, CEO of Evolv Technology
Etc:
At least one government will attempt to prevent people from representing themselves in court using AI assistance. – James Clough, Chief Technology Officer and Co-founder of Robin AI
See you
Tomorrow,
Jessica Matthews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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This story was originally published on Fortune.com
Source: https://www.aol.com/predictions-top-investors-ai-2024-125111803.html
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