Startup News: OpenAI leads in generative AI technology

OpenAI is the most prominent generative AI startup but unicorns Jasper and Stability AI are not far behind.

Imagine a bot that can solve some of the most complex mathematical equations, write computer programs, or come up with medical diagnoses.

Such feats of artificial intelligence may have already arrived in the version of ChatGPT, a chatbot innovation of OpenAI, a San Francisco-based startup. The company has emerged as a leader in what is arguably the hottest sector of the AI industry, so-called “generative AI.”

As the name suggests, generative AI can generate text, images, sounds and other media in response to short prompts. As the New York Times recently put it, “investors, pundits and journalists have talked up artificial intelligence for years, but [generative AI] represents a more powerful and more mature breed of AI.” In a recent report on the sector, Renaissance Capital wrote that generative AI has the potential to generate trillions of dollars of economic value in the coming years.

Small wonder that venture capitalists are smitten. In 2022, investors pumped at least $1.37 billion into generative AI companies across 78 deals, almost as much as they invested in the previous five years combined, according to data from PitchBook. In addition to OpenAI, other prominent generative AI start-ups include Jasper and Stability AI.

But OpenAI, co-founded in 2015 by Elon Musk and investor Sam Altman, appears to have attracted the most attention. According to news site Semafor, Microsoft is in talks to invest $10 billion in OpenAI as part of funding that will value the firm at $29 billion. In 2019, Microsoft invested $1 billion in OpenAI and became its preferred partner for commercializing new technologies for services like search engine Bing and design app Microsoft Design.

In addition, The Wall Street Journal recently reported that OpenAI is in talks to sell existing shares in a tender offer that could total at least $300 million and that venture-capital firms Thrive Capital and Founders Fund would be the buyers.

Jasper and Stability AI Building an Array of AI Software

With a valuation of $1.5 billion, Austin, Texas-based Jasper currently lacks the kind of expectations that investors are assigning to OpenAI. But the company is building an array of generative artificial intelligence software accessible to businesses and individual creators alike, enabling them to break through writer's block, create original art, and repackage content for format, language, and tone.

In October, the company announced that it raised a $125 million Series A funding round led by global software investor Insight Partners and joined by other leading firms including Coatue, Bessemer Venture Partners, and Founders Circle Capital. And in December, the company introduced JasperChat, which uses natural language that allows users to request a variety of tasks.

Across the Atlantic, London-based Stability AI, with a valuation of $1 billion, is developing a suite of generative AI products of its own. Among its best known AI innovations is Stable Diffusion, which in the words of the company “will empower billions of people to create stunning art within seconds.” In October, the company announced a $101 million funding round led by Coatue and Lightspeed Venture Partners.