The article discusses the potential for a valuation reset in the artificial intelligence (AI) industry in 2024, as investors become more cautious and start demanding lower valuations, known as “down rounds,” for AI startups. Key points include: 1) AI startups have seen a surge in funding and valuations in recent years, driven by the hype around generative AI like ChatGPT. 2) However, investors are growing wary of overpaying for AI companies, leading to more down rounds. 3) The article cites data from Pitchbook showing a rise in down rounds for AI startups in 2022. 4) Investors are concerned about the long-term viability of some AI business models and the potential for overpromising by startups. 5) The article suggests that a valuation reset could occur in 2024, as investors become more disciplined and demand clearer paths to profitability from AI companies.
Source: https://www.businessinsider.com/ai-down-rounds-rise-valuations-investors-2024-9