Source of article reprint: AI DreamWorks
Original source: Financial Associated Press
Image source: Generated by Unbounded AI
Vinod Khosla, an early investor in OpenAI and a well-known venture capitalist, recently said that artificial intelligence (AI) start-ups are overvalued and most will not be able to make money. That's his warning to investors pouring billions into this hot sector.
Since the launch of OpenAI's ChatGPT chatbot a year ago, investors have poured money into artificial intelligence startups, including chatbot makers Inflection, Anthropic and Cohere, causing the companies' valuations to soar.
However, Khosla said at a technology conference recently: "Most investments in AI today, including venture capital, will lose money."
Khosla has believed for at least a decade that artificial intelligence is a transformative technology, but he now compares the hype around it to last year’s frenzy of investment in cryptocurrency startups, including failed exchange FTX.
He said many latecomers invest because everyone else is investing, and that's what's happening in artificial intelligence.
Venture capitalists have invested $21.5 billion in AI companies globally so far this year, compared with $5.1 billion for all of 2022, according to PitchBook.
He further added that many people hope that betting on highly valued companies will pay off because others will then invest at even higher valuations - a phenomenon known in the West as the "greater fool theory" or, in China, as pass-the-parcel investment.
It is understood that Khosla is the first venture capital investor of OpenAI, the parent company of ChatGPT. His venture capital company Khosla Ventures invested in OpenAI in 2019, and OpenAI has since received billions of dollars in investment from Microsoft. In addition, the projects he participated in include DoorDash, the largest food delivery company in the United States, retail company Instacart, vegetarian meat production company Impossible Foods, literary website Wattpad, etc.
Khosla wouldn’t say which AI companies he passed on, but he reportedly didn’t participate in recent funding rounds for startups like Anthropic ($30 billion), Character.ai ($5 billion), Hugging Face ($4.5 billion), or Adept ($1 billion).
“We are very, very aggressive, but very selective,” he said.
But overall, Khosla believes that artificial intelligence will completely change the world. He believes that in the next 20 years, artificial intelligence is likely to take on 80% of the workload in 80% of human roles and will create huge economic value.
Finally, he also highlighted concerns that powerful artificial intelligence technology could be used to disrupt next year's US presidential election. He said, "Next year there will be millions of robots interfering with our election."
