Tech groupthink could hinder AI competition

Tech groupthink could hinder AI competition

Everyone wants a piece of OpenAI, the startup behind artificial intelligence-powered chatbot ChatGPT. After raising $10 billion from technology giant Microsoft, the company has raked in another $300 million from venture capital’s leading lights, including Andreessen Horowitz and Sequoia Capital, TechCrunch reported. Its competitors may struggle to find backers with deep enough pockets to help them unseat the reigning leader.

While some startup investors, like fellow OpenAI backer Tiger Global, sometimes fund direct competitors, the practice is generally frowned upon in an industry built on maintaining friendly relationships to score early access to hot deals. Sequoia relinquished its stake in payments firm Finix over concerns it competed with existing portfolio company Stripe.

Now that OpenAI has the support of venture capital’s biggest names, that norm will make life harder for smaller challengers - especially given the steep costs of training AI models and how stretched venture funding is now. For every $1.60 demanded by early-stage startups, only $1 of funding is available, according to PitchBook. Rivals could look to the other tech goliaths; competitor Anthropic, backed by Microsoft nemesis Google, recently completed a similarly sized fundraise. But there are only so many behemoths to go around. By planting its flag in Silicon Valley early, OpenAI may have won a lasting edge in the AI race.