AI investment isn’t slowing down: Venture capitalists are funding startups as they try to address environmental impact
- AI investments are not slowing down, despite skepticism and real dangers
- AI is expected to be an integral part of most industries
- Tech giants will use nuclear energy to manage electricity demand
Despite the broad potential applications of AI technology, concerns remain about its reliability, the legality of training models for copyrighted data without consent, and the environmental impact.
In light of this, many investors believe that generative AI will become an integral part of industries such as business analytics, creative services and automation.
Analysts predict that 60% of today’s skeptics will embrace generative AI in the coming years, knowingly or not, and investors are not slowing down as they continue to throw their hat into the ring.
The rapid expansion of generative AI
New figures from PitchBook show that investment in generative AI startups remains robust, with venture capitalists pouring $3.9 billion into 206 deals in the third quarter of 2024. US-based companies captured the lion’s share, raising $2.9 billion through 127 deals. OpenAI’s remarkable $6.6 billion round.
Some notable funding rounds include Magic, a coding assistant startup that raised $320 million in August, and Glean, an enterprise search company that raised $260 million in September.
Meanwhile, Hebbia, a business analytics company, raised $130 million in July. Additionally, investments extended beyond the US, with China’s Moonshot AI raising $300 million and Japan’s Sakana AI closing a $214 million round focused on scientific discovery.
Unfortunately, the rapid expansion of generative AI also brings challenges, especially in the area of energy consumption. According to Bain & CompanyCompanies deploying AI at scale will need gigawatt-scale data centers, which consume up to twenty times the power of today’s average data centers. This demand threatens to put pressure on global electricity and labor markets.
The dependence on data centers has already extended the use of coal-fired power plants Morgan Stanley Greenhouse gas emissions warnings could triple by 2030 if the trend continues unchecked.
In response, major data center operators such as Microsoft, Amazon and Google are turning to nuclear power to offset their environmental impact. For example, Microsoft has announced plans to source energy from the controversial Three Mile Island nuclear power plant, although such projects could take years to become operational.
Despite these environmental and technical hurdles, investor interest in generative AI remains strong. ElevenLabs, known for its viral voice cloning tool, is reportedly trying to raise money at a $3 billion valuation. Black Forest Labs, the company behind a controversial image generator on the X platform, is also in talks for a $100 million funding round.
Via TechCrunch