Alphabet’s A.I. Frenzy Hits The Startup Scene: CapitalG unit leads $100 million Investment

Alphabet, Google’s parent company, is investing heavily in artificial intelligence and the current upsurge of generative A.I. These investments are not limited to their products but also extend into startup businesses.

CapitalG, Alphabet’s venture capital division at an advanced stage, has revealed to CNBC that it conducted a $100 million funding in AlphaSense, a corporate data provider. This investment values the company at $1.8 billion and pits it against competitors like FactSet and Bloomberg, who offer similar data for forming business plans or making investments.

Tuesday’s funding round results from months of heightened expectations regarding generative A.I., especially OpenAI’s ChatGPT and other text-generators based on large language models (LLMs), to provide insightful and imaginative responses to inquiries. In February, Google unveiled a conversation system called Bard which will be incorporated into its dominant search engine and other services.

Jack Kokko, the CEO of AlphaSense, announced that they are developing a feature for their product that will summarize financial documents quickly and accurately for customers, allowing them to extract key points easily. A.I. software has struggled in the past with summarization, but thanks to advancements in LLMs (language models), this task has become much more feasible.

Kokko established AlphaSense in 2011. Most recently, a flat financing round was held following a $225 million investment in June which Goldman Sachs and Viking Global Investors headed. This round has caused the valuation to double since the 2021 financing, which these same investors also led.

A.I. that generates content was not discussed in the previous two rounds because the term had not yet become widely used. Last year, a press release was issued which revealed the potential of this technology.

AlphaSense says:

” Powered by AI and natural language processing to “extract relevant insights from an extensive universe of public and private content.”

This year, the tech funding sector has experienced a decline along with public company valuations and an inability to launch IPOs. However, Generative A.I. has been a positive development in current market circumstances and has even become quite popular in some areas.

In March, two former Google employees founded Character.AI, a 2-year-old pre-revenue startup that was given a $1 billion valuation by Andreessen Horowitz, who led the investment of $150 million.

Kokko declared that AlphaSense had already achieved more than $100 million in recurring revenue by 2022. The new funds will be used to hire additional sales personnel as the firm gears up for an IPO following economic stabilization. Additionally, the money will permit AlphaSense to utilize advances in A.I. to bolster its technology.

James Luo, a partner at CapitalG, noted that AlphaSense’s utilization of newer language models could make it more attractive to customers outside the traditional financial services sector. He suggested that salespeople may be especially interested in using the product if its interface was easier to navigate.

James Luo says:

“These are the people who are using Google Search to try to find every piece of information but they don’t have access to a lot of proprietary content,” Luo said of potential new users. “If you don’t work in that world, you need something that makes it a lot easier for you to understand that information.”

LLMs nowadays experience a problem known as “hallucination” in the jargon of A.I. scientists, meaning that the software tends to give wrong results.

Kokko revealed that AlphaSense is researching methods to construct accurate summaries with relevant document footnotes. While he declined to specify the specific language-learning models (LLMs) that AlphaSense plans to use, he said the company is evaluating almost all popular models available. Big tech companies like Alphabet and Meta and startups like OpenAI and Cohere have created LLMs.

As exemplified by the investment in AlphaSense, Alphabet’s A.I. frenzy highlights A.I.’s growing interest and potential in transforming various industries. While the rapid pace of A.I. development presents exciting opportunities, it also brings ethical and societal challenges that must be thoughtfully addressed. As we continue to witness Alphabet and other tech giants driving the A.I. revolution, it is essential to balance innovation and responsibility to ensure that A.I. technologies are developed and deployed to benefit society.

Source: CNBC

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