In recent weeks, the AI industry (AI startups in particular), has seen substantial financial activity. DeepL, a language translation startup, secured $300 million, resulting in a $2 billion valuation. Scale AI, specializing in data-labeling for machine learning, saw its valuation nearly double to $13.8 billion after raising $1 billion. Additionally, H, a French startup working on frontier models, raised an impressive $220 million in a seed round, propelling it into unicorn status.
Traditional institutional investors such as Accel, Index, and Y Combinator (YC) are involved in these investments. However, the participation of major corporations highlights a strategic push to stay relevant while avoiding regulatory scrutiny.
The Quasi-Merger Tactic
Scale AI, since its founding in 2016, primarily attracted institutional and angel investors until its Series E round in 2021. The Series F round saw contributions from Meta, Amazon, Nvidia, and the venture capital arms of Intel, AMD, Cisco, and ServiceNow.
On the same day as Scale AI’s Series F announcement, H revealed its own impressive lineup of investors, including Amazon, Samsung’s VC arm, and UiPath. This trend mirrors Microsoft’s notable partnership with OpenAI, sparking regulatory interest in the EU and the U.K. over concerns that big tech companies are seeking to control emerging technologies through investments rather than outright acquisitions.
Microsoft’s 49% stake in OpenAI is under scrutiny by European regulators, regardless of its voting power in the company.
Anthropic’s Position
Anthropic, a three-year-old AI startup, has raised over $7 billion, with major investments from Google, SAP, Salesforce, and Zoom. Amazon alone has contributed more than half of this amount, culminating in a $4 billion investment in March. Despite not holding a majority stake, Amazon’s influence is being examined by the U.K. antitrust regulator, the CMA.
The CMA is also investigating Microsoft’s recent acqui-hire of Inflection AI, where Microsoft acquired key personnel to form a new consumer AI unit. Additionally, Microsoft’s $16 million investment in French AI startup Mistral was investigated but quickly dismissed due to its small scale.
Nvidia’s Growing Influence
Nvidia, traditionally not grouped with Big Tech giants, has become a significant player in the AI sector. Valued at $770 billion last year, Nvidia’s market cap has surged to over $2.5 trillion, placing it third globally behind Microsoft and Apple but ahead of Meta, Amazon, and Alphabet.
Nvidia’s investments include AI startup Hugging Face, alongside Amazon, Google, Qualcomm, Intel, and others. Nvidia also holds stakes in Cohere, Perplexity AI, Inflection AI, Cohesity, Mistral AI, Weka, Wayve, and various other AI startups.
The Future of AI Investment
Big Tech shows no signs of slowing down its investment in AI startups. By acquiring smaller equity stakes, these companies hope to avoid regulatory issues while still exerting considerable influence over the startups. These investments allow them to steer the development and strategic direction of these companies, maintaining their competitive edge in the rapidly evolving AI landscape.
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