December 1, 2023
Riding the AI ​​wave and investing in startups

AI startups have attracted billions of institutional funding, sending valuations skyrocketing. Billions of dollars poured into OpenAI and the valuation tripled to $86 billion in October. However with Sam Altman’s sudden exit from OpenAI’s valuation last week, we have already seen a ten percent drop in WorldCoin token investments.

Investment in AI is on the rise as Amazon recently pledged $4 billion to Anthropic, Nvidia invested in Foghere’s $270 million funding round, and Microsoft made over $13 billion in commitments to OpenAI. Have invested more.

But who is making all the money in AI?

For individual investors, securing investments in promising private AI companies is challenging. Venture capital and private wealth groups typically reserve allocations of these private-company stocks for institutional investors and ultra-high-net-worth (UHNW) individuals, so finding a foothold can be difficult.

Grace Chen, founder of alternative investment platform Upmarket, is working to change that, “This year Upmarket has helped our clients invest in OpenAI, Cloudera, CoreWave, and other leading companies like Neuralink, SpaceX, and Stripe.” “We are seeing a lot of demand from accredited investors who want access to pre-IPO deal flow in the artificial intelligence sector and are interested in investing in some of the startup darlings of 2021 that now trade at significantly discounted valuations,” he said. Are.”

For investors who can tolerate the liquidity and increased risk that comes with private investing, fast-growing AI companies may be the most dynamic opportunities within technology today. Valuation is one area that can scare off AI investors as high growth typically demands investors pay higher multiples on revenues or earnings. With projections that the AI ​​market will grow 6x this decade to a market worth over $594 billion by 2032, expectations are high.

Chen explains that what makes Upmarket different from other platforms is their curation process that involves due diligence and a willingness to walk away from deals that do not offer attractive terms or investor-friendly structures, “Some Platforms often attract investors with $100 deals for obscure pre-revenue companies, or on terms that differ significantly from recent secondary-market transactions.” Chen said some platforms will drastically increase pricing and fees for the most popular offerings, adding that “in the upmarket, we try to focus on the best companies with the best structures at the best prices.”

While investing always comes with risks, it is promising to see investment platforms like Upmarket democratizing access to a range of asset classes, from promising AI companies and high-growth private companies to hedge funds and private equity.


Thanks to Rahmat Orakza for his research contribution to this article posting.

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