“`html
TLDR:
- VCs are discussing whether the high valuations of AI companies are justified
- OpenAI’s valuation jumped from $27-29 billion in 2019 to $80 billion in 2022
In a recent panel at Fortune Brainstorm Tech 2024, venture capitalists deliberated on the validity of the soaring valuations seen in the AI industry. Guru Chahal from Lightspeed Venture Partners and Mary D’Onofrio from Bessemer Venture Partners agreed that paying for transformative AI companies may not be as costly as it seems in hindsight. Chahal pointed to OpenAI, which saw its valuation surge from $27-29 billion in 2019 to over $80 billion this year, illustrating how early investments could turn out to be a bargain in the long run.
While the potential for lucrative returns exists, D’Onofrio cautioned that not all AI companies will succeed, especially in crowded sectors like AI software automation and customer success. Lila Tretikov from NEA expressed a bullish outlook on AI, predicting that AI will become ubiquitous in industries much like digital technology is today.
Discussion also centered around the methodology used to determine AI valuations. Darian Shirazi from Gradient Ventures revealed that the process can be subjective, with valuations often influenced by investor interest, conviction, and ownership desires rather than a strict methodology. This has led to instances where companies like Wiz fetched high valuations, such as $12 billion in a recent funding round, and are later sought after by tech giants like Alphabet, potentially for even higher sums.
Overall, the debate highlights the complex nature of valuing AI companies, with differing opinions on whether the lofty valuations are justified as the industry continues to evolve and attract interest from investors.
“`
