This column looks back on my week with AI. Please read the previous article here.
The big news in the AI space this week was undoubtedly Microsoft’s massive $1.5 billion strategic investment in UAE-based artificial intelligence company G42. This is the largest private round for an AI startup this year.
Of course, Microsoft’s big bets on AI companies are nothing new. Just a few weeks ago, we learned that the Redmond, Washington-based tech giant has joined chatbot startup Inflection AI, AI robotics company Figure, Paris-based generative AI company Mistral AI, and many others this year. We have highlighted recent transactions we have made. That’s not to mention the well-known relationship between Microsoft and OpenAI.
But the G42 agreement is another big milestone for Microsoft that shows what it intends to do and invest in to win the AI race.
Investing in the G42 appears to have had some unique problems.
First, there are growing concerns in the United States that some Middle Eastern countries, including the UAE, are strengthening ties with China, making such an agreement clearly difficult given the current environment.
Second, the G42 has a relationship with China, and the G42 has reportedly severed ties with China, which has raised serious concerns in the United States.
Both companies were able to overcome that and made commitments to both the United States and the United Arab Emirates to develop AI.
However, in addition to the $1.5 billion investment, the deal also supports a new $1 billion developer fund aimed at creating an AI workforce and talent pool to drive innovation in the region. I will do it.
While there is no shortage of stories about money from UAE sovereign wealth funds looking to invest in US startups, there is less talk about US companies, funds and companies looking to invest in UAE-based startups. do not have.
In fact, only 18 US-based companies participated in transactions with UAE-based companies this year, and none participated in multiple transactions, according to Crunchbase data.
These 18 companies have participated in just nine unique rounds in the UAE, the largest being a $23 million Series A for social discovery app Hunch last month led by US companies Alpha Wave Ventures and Hashed.
Last year, that number increased only slightly, with about 60 U.S. companies doing business with startups in the region. In fact, Techstars led with six of his deals.
Of course, there could be a number of reasons why American companies and funds are not participating in the UAE’s burgeoning tech startup ecosystem, but it’s possible that some of that is due to political concerns that clearly aren’t an obstacle for Microsoft. There is little doubt that .
However, Microsoft’s acquisition of a minority stake in G42 could lead to an increase in these investments. By announcing the creation of a developer fund, Microsoft is sowing the seeds for other technology investments in the fast-growing region, with an apparent focus on AI.
There’s no doubt that projects that receive that funding, along with Microsoft’s vast computing resources, are likely to spawn even more startup ventures that could potentially attract VC and corporate funding. This is especially true since these projects are definitely AI-related.
It could also be a case of Microsoft showing that it can invest in the region, even if these deals require some intermediation.
The new partnership with G42 definitely seems like a win for the Windows maker, considering it also includes the company using Microsoft’s cloud services to run its AI applications. It could also be of great benefit to the region.
What caught our eye and more:
- Launching a generative AI startup doesn’t guarantee smooth sailing. This week, it was reported (and later confirmed by the company) that Tome, the developer of the generative AI presentation tool it launched several years ago, is laying off staff. According to Tomé, 20% of the approximately 60 jobs will be cut. The company has raised more than $75 million in several rounds. The latest Series B was led by Lightspeed Venture Partners. It’s not common to hear of AI startups laying off staff, but more layoffs are likely, especially if funding slows.
- New York-based HumanX raised more than $6 million in funding this week led by Primary Venture Partners. This round is interesting because the startup is not a generative AI company per se, but rather is striving to become an AI strategist and thought leader through a conference that brings together top AI leaders. The company was founded by the team behind the Money20/20 conference. The startup’s first gathering is scheduled to take place in March 2025. HumanX will also provide advisory services and AI regulatory and policy advocacy.
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Illustration: Dom Guzman
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