AI startups have attracted billions of dollars in institutional funding, sending valuations soaring. Billions were invested in OpenAI and the valuation in October tripled to 86 billion dollars. Although with Sam Altman’s abrupt exit last week from OpenAI’s valuation, we have already seen investments in Worldcoin tokens drop by ten percent.
Investments in AI are intensifying as Amazon recently committed to 4 billion dollars at Anthropic, Nvidia invests in Cohere $270 million funding roundand Microsoft has invested more than $13 billion in commitments to OpenAI.
But who makes all the money from AI?
For individual investors, it is difficult to gain exposure to promising private AI companies. Venture capital and private wealth groups typically reserve allocations of these private company stocks to institutional investors and ultra-high net worth individuals (UHNWs), so finding inroads can be difficult.
Grace Chen, founder of an alternative investment platform Top of the line, is working to change that: “This year, UpMarket has helped our clients invest in OpenAI, Cohere, CoreWeave and other leading companies like Neuralink, SpaceX and Stripe. She added that “we are seeing strong demand from accredited investors who want to access pre-IPO deal flow in the artificial intelligence space and who are interested in investing in some of the darling startups of 2021 that are coming up.” are now trading at significantly reduced valuations.”
For investors who can tolerate the illiquidity and increased risk that private investments can bring, fast-growing AI companies could represent the most dynamic opportunity in today’s technology sector. Pricing is an area that can scare off AI investors, as high growth typically requires investors to pay a high multiple on their revenue or earnings. With projections that the AI market will grow 6-fold this decade to a market of over $594 billion by 2032expectations are high.
Chen explains that what sets UpMarket apart from other platforms is their curation process which involves due diligence and a willingness to walk away from deals that do not offer attractive terms or investor-friendly structures. “Some platforms flood investors with often hundreds of transactions. for obscure companies that do not generate revenue, or on terms that differ wildly from recent secondary market transactions. Chen added that some platforms will significantly increase the prices and fees of the most popular offerings, adding that “at UpMarket, we try to focus on the best companies, with the best structures, at the best prices.”
While investing always carries risks, it’s promising to see investment platforms like UpMarket democratizing access to promising AI companies and a range of asset classes from high-growth private companies to hedges. funds and private equity.
Sources:
Rehmat Orakza for her research contributions to this article.