Relaunch & 2022 review: Generative LLMs & ChatGPT 🤯; NLU firms raise massive capital; SBF skews the LLM market
While ChatGPT takes the cake for out right game changing impact, the broader LLM/NLP private market is on fire with a one third increase (~$2.4B) in all time total capital raised, in 2022 alone!
Relaunching RiD
The RiD newsletter has been on a hiatus for most of 2022. I have been focused, and still am, on my own start up, which is only be getting more intense in 2023. However, after a clean break from RiD in 2022, I am desperate to get back to creating this weekly newsletter, given the intense activity in the commercial NLP / LLM market and advances made in 2022.
The broader emergence of generative AI in 2022, both in text and art, has moved NLP / LLMs into the spotlight and looks set to potentially disrupt the broader start up NLP market.
If you want some further reading on the general state of the broader AI start up market, these 3 articles / repos are a good place to start:
For me, the focus has always been on language related machine and deep learning advancement. If you want to read my original “manifesto” on why I launched RiD, you can find it here. In summary however, the purpose was to:
“track the [weekly] progress of natural language understanding (NLU) first companies and the impacts they are having commercially and socially”.
Given these impacts look set to massively expand in 2023 and I plan to be right there as it happens and offer a single point of content aggregation each week. Additionally, my goal is to provide a direct connection to these companies and the people working within them. This includes interviews, surveys and whatever else is needed to stay in the middle of it all.
The advances at OpenAI, Google & others are creating a frenzy of activity in the generative AI space, which may well create head winds for the very companies that have been leading the NLU charge. LLM advances in 2022 are swamping capabilities built up over the last few years, which means disruption across the board. All this I will be getting into over the new few weeks, and months.
So please subscribe and enjoy the ride.
Basic market data tracker:
My tracker looks at all companies I have identified as being NLU first (or is a core part of their business model) and in Series A or beyond in terms of maturity. I have provided a link to these companies below (and how I define them), so feel free to mail me if you think there are some I have missed.
The list itself has grown significantly this last year both due to companies maturing as well as finding new companies previously omitted. We are now tracking 194 companies.
Overall, 2022 was a HUGE year for private LLM/NLU companies with some eye watering raises, although somewhat skewed by, yes…FTX & SBF. SBF was the lead investor in Anthropic’s monstrous $580m Series B raise. Exactly how much SBF invested is unknown, but as the lead we can assume it was significant.
While 2022 will be remembered as the dawn of generative AI, it was also the single biggest capital raising year for NLU first companies, with over $2.4B (!!) raised by these post seed private companies. Will this investment growth last into 2023 or will these start ups themselves be disrupted by the handful of players who can afford to build these uber AI / AGI(ish) models? Thats what we’re going to be tracking and diving into but first let’s take a look at who did what in 2022.
In the public markets, Nuance was acquired by Microsoft for ~$20B in April, which was a strong premium over the ~$17B at the end of 2021 and well timed (given the equity market collapse in the second half of 2022). Nuance is a conversational AI company in the healthcare space.
The broader public market NLU companies however got pounded, losing 2/3rds of their value in total, with some companies, like CS Disco losing almost 90% of their market cap. The biggest absolute loser though was Qualitrics wiping ~$14 off it’s valuation, down to a market cap of ~$6B. This is worse than the broader market indexes but roughly aligns with the technology market downturn.
Switching to the more interesting private market, some big checks were cut for some of the more established mid and late stage companies like Ada ($130m), SoundHound ($111m) & Laiye ($70m), however there was a lot of activity in the earlier stage series A & B companies, with huge investments in Bombax / Xiaoice ($140m), Observe.AI ($125m), Hugging Face ($100m), Cresta ($80m) & Take Blip ($70m).
Far and away the big theme of these larger checks is again conversational AI / chat bot type companies, with a few important outliers. First, Hugging Face, more a model repo / platform, had a large raise of $100m. The second and biggest exception, both in terms of money raised and theme, was Anthropic ($580m). Beyond the huge capital raise, Anthropic is focused on AI ethics with a “particular focus on ensuring its systems are free of negative traits like bias and toxicity”. This makes Anthropic a very distinct player in this space and an interesting company to track. Finally, Instoried, a content creation and analytics platform, raised $200m in debt financing, and sits squarely in the generative AI camp, and will be very interesting to watch going forward.
Other services like translation (Lilt) and sentiment analysis capabilities (Cresta, Capacity & Chattermill) generated some large checks as well.
Anyone who wants to take a look at my full list of companies I track can access this here.
Also, if you want to look at how I decide what is NLU first, can do it here (under section “What is an NLU first company?”). One BIG change since we launched, OpenAI is now a commercial institution. It was initially explicitly excluded, as stated in the original newsletter, however its move into being a profit making organization plus its leading position in the generative AI space means we just HAVE to include it in our tracking list now.
Happenings this week:
My weekly newsletter going forward will continue to track the following goings on each week:
Commercial:
What large commercial events in NLU occurred this week. Mergers, acquisitions, partnerships, fails etc.
Technical:
We’re there any big technical releases or breakthroughs this week. Papers released and other advances impacting the LLM and NLU space.
Ethical & other:
General points of interest: Any other events worth noting each week.
Ethics: Any events related to ethics in AI for the week.
Other media:
Any great podcasts this week.
Any tweets or articles etc worthy of note or review.
»»»»»»»»»»»»»»»»»»>
That’s it for this relaunch. Have a great day. Please subscribe to keep the conversation going.