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  • Investor frenzy will overvalue AI tech start-ups, says early OpenAI backer

Investor frenzy will overvalue AI tech start-ups, says early OpenAI backer

Also: Biden to sign executive order expanding capabilities for government to monitor AI risks


In today’s newsletter, we delve into the burgeoning sphere of AI, marked by caution and strategic expansion. Vinod Khosla, an early OpenAI investor, voices concerns over AI start-ups' overvaluation, amidst a venture capital surge, paralleling past cryptocurrency hype. Concurrently, UK Chancellor Rishi Sunak is amplifying AI chip and supercomputer investments to £400m, propelling the UK's aim to lead in AI safety. On the regulatory front, President Biden's executive order will expand the government's oversight on AI risks, seeking to balance innovation with accountability. In the corporate arena, Google's hefty $2 billion investment in AI startup Anthropic heats up competition, signaling intensifying interest from tech giants in the AI race. Furthermore, the G7's proposed AI code of conduct seeks to harmonize ethical AI development globally. Our AI tools updates feature OpenAI's ChatGPT Plus enhancements, introducing file uploads and analysis in its beta iteration. Lastly, the venture capital landscape is abuzz with Generative AI search startup Perplexity AI's anticipated funding round, potentially tripling its valuation, showcasing investor appetite for cutting-edge AI solutions.


  • 💵 Investor frenzy will overvalue AI tech start-ups, says early OpenAI backer

  • 🇬🇧 Sunak ramps up spending on AI chips to £400m

  • 🇺🇸 Biden to sign executive order expanding capabilities for government to monitor AI risks

  • 💰 Google agrees to invest up to $2 billion in OpenAI rival Anthropic

  • 🌎 G7 to agree AI code of conduct for companies

Vinod Khosla, an early backer of OpenAI, has warned investors about the overvaluation of AI start-ups, likening the current investment frenzy to last year's rush into cryptocurrency start-ups. He pointed out at a tech conference that most of these start-ups are likely to fail financially, despite the sector attracting a significant increase in venture capital -- $21.5 billion globally this year compared to $5.1 billion in 2022. Khosla highlighted that many are investing based on the "greater fool theory," hoping to sell at a higher valuation later. Although he remains optimistic about AI's potential to revolutionize various sectors, he expressed concerns over the inflated valuations and the risk of powerful AI technology being misused, such as in interference with upcoming US elections. He stressed the importance of the US winning the AI race against China to leverage AI for global benefits like providing free medical services or educational tools.

UK Chancellor Rishi Sunak is set to bolster taxpayer spending on AI chips and supercomputers to £400m to enhance the nation's tech stature. This four-fold increase in investment aims to advance a national AI Research Resource, aiding in AI development and safety. It will finance new facilities and upgrade existing ones, contributing to the UK's goal of becoming a global AI safety hub. This move aligns with broader ambitions for international collaboration on AI research, showcased in an upcoming summit at Bletchley Park.

President Biden is slated to sign an executive order aiming to bolster the government's oversight on AI risks and formulating new regulations surrounding its use across various federal sectors including healthcare, education, trade, and housing. The initiative underscores the dual-edged potential of AI—highlighting its capacity for innovation and societal betterment, alongside the risks of misuse which could amplify issues like fraud, discrimination, and disinformation. The order mandates the establishment of standards, particularly focusing on data privacy, to ensure responsible AI utilization. Unlike prior efforts, this directive empowers various agencies to have a say in AI's market influence, marking a significant stride toward national governance of the AI industry. The executive order outlines the designation of a dozen agencies to review and enhance their AI management, with a timeline of 90 to 240 days for compliance, and forms a White House AI Council to supervise federal AI endeavors.

Alphabet's Google has committed to invest up to $2 billion in the AI startup Anthropic, intensifying the competition in the AI sector against rivals like Microsoft-backed OpenAI. Google's investment includes an upfront amount of $500 million with an agreement to add $1.5 billion more over time, marking a significant ramp-up in its efforts to enhance its position in the AI domain. This investment solidifies Google's relationship with Anthropic, which was co-founded by former OpenAI executives, showcasing Big Tech companies' growing interest in AI technologies. Amazon has also shown interest in Anthropic with a notable investment, reflecting the ongoing maneuvering by cloud companies to establish ties with AI startups reshaping the industry. This development underlines the escalating competition and investments within the AI sector as tech giants race to secure a foothold in the rapidly evolving field.

The G7 nations will enact a voluntary AI code of conduct for companies to foster the responsible development and use of advanced AI, addressing privacy, security, and misuse concerns. Initiated during a May forum, this 11-point code promotes globally safe AI, urging firms to manage risks throughout the AI lifecycle, disclose AI systems' capabilities and limitations, and enhance security measures. This initiative bridges the regulatory gap, particularly notable between the proactive EU and the more laissez-faire stance of the US, Japan, and others, marking a significant step toward global AI governance.

🛠️ AI tools updates

OpenAI's latest update for ChatGPT Plus subscribers enhances the chatbot's functionalities, introducing the ability for users to upload and analyze various file types, including text and images, and engage with advanced data analysis tasks. The new beta features are designed to intuitively decide when to activate specific modes like Browse with Bing, based on the user's prompts, eliminating the need for manual mode selection. This integration is a step towards incorporating elements from the ChatGPT Enterprise plan into the individual subscription service, providing a more seamless and versatile user experience. Although not all Plus members have access to the multimodal update yet, those who do can engage in sophisticated interactions, such as summarizing data, creating visual content with DALL-E 3, and even adding creative twists to images, as evidenced by shared user experiences of the platform's enhanced capabilities.

💵 Venture Capital updates

Generative AI search startup Perplexity AI is on the brink of securing a significant funding round, potentially elevating its valuation to around $500 million from $150 million. Institutional Venture Partners LLC is expected to spearhead the investment. Perplexity AI, which proposes an innovative "answer engine" as opposed to a traditional search engine, is led by Aravind Srinivas. The startup envisions changing the way users interact with the internet, providing more intuitive and efficient methods to access information.

🫡 Meme of the day

⭐️ Generative AI image of the day