To Live and Die in AI: Silicon Valley’s AI Firms Look to Exit After Weak Demand
To Live and Die in AI: Silicon Valley’s Artificial Intelligence Firms Look to Exit After Weak Demand
The startup artificial intelligence landscape in Silicon Valley continues to evolve, with startups pushing boundaries and attracting significant investment. Recently, several AI-focused firms have opted for jobs at top tech companies without a full sale of their startup firm. This blog focuses on five exits in the AI sector, highlighting the fact that in the frenzy to invest, many buyers of the technology are realizing that they can hire key employees and only buy pieces of the startup – thus saving significant sums of money.
Adept AI Labs Assets Acquired by Amazon
Adept AI Labs, an artificial intelligence research and product lab focused on building general intelligence, had its assets acquired by Amazon for a reported $330 million. Prior to the acquisition, Adept AI had raised $415 million in funding, indicating significant investor confidence in its technology and potential. While Amazon did not acquire the entire company, the acquisition of Adept’s assets strengthens it also signals that even Cloud Tech Titans are selective in how they acquire companies who have the technology but not the customer base.
Character.ai – Funded by Google, But Not Sold to Google
Character.AI, a startup specializing in creating conversational AI characters, was acquired by Google for an undisclosed amount. Character.AI had previously raised $150 million in funding, but the revenue from paid users did not materialize, partially due to lack of product and market fit.
Character.ai founder Noam Sheezer and Co-Founder Daniel De Freitas used to work at Google and had a close relationship with Google Senior Executives, which essentially bailed them out. This acquisition fits the growing narrative of hiring key executives without always buying the assets of the company. In this case, Google is investing in Character.ai and is getting licensing rights.
Microsoft Hires Inflection AI Employees Then Spends $650M
Microsoft seems to have bought most of Inflection AI, a startup focused on developing personal Intelligent assistants, just to get its hands on one executive, Mustafa Suleyman. Mustafa is a former co-founder of DeepMind had many of its employees hired by Microsoft which ultimately licensed the technology for $650M. Inflection AI was co-founded by Mustafa Suleyman. The question remains – did Microsoft pay $650M for the technology or for Mustafa? Note that Mustafa is now the head of artificial intelligence at Microsoft.
Hopin – RingCentral Gets a Deal
Hopin, a virtual events platform, raised a significant amount of Money with little return. Hopin was partially acquired by RingCentral for $15 million with another $35 Million based on performance post-acquisition. The acquisition includes Hopin’s events platform and team.
Prior to the acquisition, Hopin had raised a total of $1.15 billion in funding, reflecting the initial hype surrounding virtual events during the pandemic. While Hopin faced challenges as in-person events returned, the acquisition by RingCentral allowed them to leverage their technology and expertise in the virtual events space.
To Live and Die in AI – Selling Out is Better than Dying
These acquisitions highlight the dynamic nature of the Artificial Intelligence industry in Silicon Valley. While the specific financial details of the Adept AI and Character.AI acquisitions remain undisclosed, the substantial funding raised by all three companies prior to their acquisitions underscores the immense potential and investor interest in Artificial Intelligence technologies.
Bottom Line
The future of Artificial Intelligence in Silicon Valley remains bright, with both startups and established players vying for a leading position. As Artificial Intelligence technology continues to advance, so will the evolution of how Artificial Intelligence firms are acquired. Buying the assets of a firm may attract government scrutiny but this is not a new practice at all.
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