THE HILL OP-ED: Venture Capital’s Love Affair with AI Start-ups is a Bubble Waiting to Pop
BY GAYLE JENNINGS-O’BYRNE, OPINION CONTRIBUTOR - 06/20/24
We’re experiencing a tale of two cities in the venture investing world for AI and non-AI companies. It’s been the best of times for pure-play AI startups and those that could convince investors they were close enough to being one. It’s been the worst of times for non-AI startups for the past two years; funding for some groups of founders has significantly plummeted and companies that would once have received follow-on venture rounds were left to become profitable or die.
With almost a quarter of all venture funding now flowing toward AI startups, I see the signs of some of investing’s darker days: a thin understanding of the core technology, the massive cash burn of the startups, poorly defined business models and sky-high valuations.
The signs, in other words, of a bubble.