Demonstrating an example of decreasing deal-making as we know it in tech, investors backing Radical Ventures include ImageNet project founder Fei-Fei Li, former Google chief executive Eric Schmidt, and Google Brain researcher Geoffrey Hinton, reported the Financial Times.

Having raised over half of its $550m target so far, the funding round is set to go towards the largest investment budget supporting AI start-ups, with Radical Ventures previously launching a $350m fund in 2019.

Radical Ventures, founded in Toronto 2017, already has OpenAI rival Cohere — established by former DeepMind and You.com engineers — in its investment portfolio.

The firm plans to invest in companies that are building the models that power an array of AI applications, along with more niche start-ups that can build on top of those models.

“There’s no question there’s a lot of hype and money flowing into this space,” Jordan Jacobs, managing partner and co-founder of Radical Ventures, told the FT.

“We’ve had an enormous flood of inbound [interest in investing] from everyone you can imagine.

“You’ll see all the world’s software replaced by AI over the next decade. Every business will end up using this [generative AI technology], either directly or via third-party software that is incorporating it.”

Rising investments in generative AI

An array of corporate investors, including Microsoft, IBM Ventures and Alphabet’s GV have made substantial bets on AI innovations in recent times — this week, Microsoft announced the third phase of its partnership with OpenAI, having recently revealed plans to embed ChatGPT into its Bing search engine.

There was a surge in early-stage investments towards generative AI start-ups in the final months of 2022, even as investors pulled back across other areas of the tech market.

According to private capital market tracker Pitchbook, $1.4bn was invested in generative AI last year — almost totalling funding in the category in the previous five years combined.

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