Another $4B for AI models

Author

Alex Wilhelm
November 22, 2024 • Estimated Reading Time: 6 minutes

Top News

  • Anthropic raises $4B more: The biggest single news item in technology today was Anthropic’s latest mega-raise from Amazon. The $4 billion deal — which does not grant the e-commerce giant majority control — will see Anthropic have the firepower it needs to keep competing with OpenAI and other foundation model companies. That Anthropic will now be more closely tied to Amazon silicon is another story to watch.

  • MatX raises $80M for AI chips: Earlier this week, Jason asked Alex about the startups working to take on — and take a piece of — Nvidia. Alex mentioned TWiST500 member Etched as one example. Another? MatX, which just nailed down a sizable new round after raising $25 million earlier this year.

  • The end of Northvolt: Not every effort to build a national or bloc-champion will succeed. The latest case-in-point? Northvolt, which TechCrunch reports is “filing for bankruptcy in the U.S., striking a blow to Europe’s ambitions for homegrown lithium-ion batteries.” Given the scope of re-industrialization talk in Western nations, the fall of Northvolt is non-trivial. Nor was the capital that it raised before failing.

TWiST500

I need to look more deeply into MatX, which might make a fine addition to the TWiST500. More on that next week.

Today, I want to talk about Anthropic. As a TWiST500 company, its latest capital investment is a good excuse to remind ourselves why Anthropic and its ilk are able to raise as much capital as they have in recent quarters. And it’s not all hype.

A recent Menlo Ventures report on enterprise genAI spending pegged big corporate foundation AI model spending at $6.5 billion in 2024, up from a comparatively modest $1.0 billion figure in 2023. That’s how OpenAI reached a reported $3.7 billion run rate this year and how Anthropic is reportedly on pace to close the year on a roughly $1 billion run rate itself.

Presuming that there’s another year of hot growth ahead for AI generally, you can imagine that foundation model spend will continue to scale. Do I expect another >6x in a year? No. But a flat doubling would keep the game afoot, yeah?

Just as it took SaaS companies a while to flip from cash consumption to cash generation, we’re still a ways out from foundation model profits. Market growth and willing capital sources should keep us entertained in 2025. — Alex

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This Week in Startups

E2049: Jason and Alex dive into Nvidia’s blockbuster earnings, highlighting the massive demand for Blackwell GPUs and what it means for AI’s future. They break down the DOJ’s antitrust push against Google, including potential divestitures of Chrome and Android, and how it could reshape search and advertising. Jean-Paul Schmetz from Brave joins to talk about privacy-first search and the future of AI, and we wrap up with inspiring Founder Fridays stories from Georges Colbert and Longview’s Kitty and Coco, showcasing how startups are thriving in unexpected places.

E2048: Jason and Alex kick off the show with a deep dive into Nvidia’s expected $33B Q3 revenue and its shift from gaming GPUs to dominating AI workloads. Plus, we had two amazing guests: Steven Simoni, founder of Allen Control Systems, who shared how their counter-drone robotic gun systems are revolutionizing defense, and Rami Abi Habib, founder of Querio, who gave a great demo of their intuitive data query platform.

E2047: Spenser Skates and James Evans join Alex to discuss Amplitude's acquisition of Command AI, shedding light on recent startup M&A trends and the strategic vision behind this move. The conversation delves into Command AI's user assistance technology and its integration into Amplitude, which aims to enhance user surveys and feedback. They also cover the acquisition deal structure, regulatory concerns, and the decision-making process between raising funds and selling.

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