ChatGPT was barely known as a brand or a tool until OpenAI released an early demo of the chatbot on 30th November 2022, and by January 2023, the company announced that it had taken around $11.3 billion in funding from Microsoft and others. And boy has it shaken up the ecosystem, reaching an estimated 100 million users and becoming the fastest-growing consumer application in history a mere eight weeks after launching. Not only is the average coder able to 10x their output, we have also seen a raft of new applications built which take advantage of GPT-4 (the large language model which is the basis for ChatGPT) - the likes of Galileo AI, DuoLingo Max, Copilot for Excel, Be My Eyes, and many more.

Now regulators in the US and Europe are considering the implications of AI on all aspects of our life. Even Rishi Sunak and Joe Biden, when they met in the US earlier this month, announced an economic partnership in relation to generative AI as part of their “Atlantic Declaration”. Will AutoGPT with its self-prompt capability lead to global demise (think ChaosGPT)? Will we now see jobs across multiple sectors disappear? What do we need to do to best prepare for the future which this new technology harbours? How does a country compete for the best start-ups and founders taking advantage of these tools? All questions that many - in and outside the venture capital ecosystem - are now focused on.

New unicorns will be born no doubt as a result of this leap in AI technology – take Nvidia, whose GPUs are powering a new dawn of generative AI, whose valuation hit $1 trillion as of the end of last month and is flirting around this market cap still!

But a word of caution may be in order too. It won’t be plain sailing for founders. Investors will be wary - especially given the not-so-distant blow ups. Simply sticking an AI wrapper around your start-up/product will not get you the cheque. Instead, what investors are asking today - given the current macro fabric of high inflation and high interest rates (and frankly, as yet, little evidence to show these being managed sufficiently) and the geopolitical climate (most notably Russia/Ukraine and the all too clear strains of the China/US dynamic) - is for companies to manage their costs base, to make cuts and to focus on profitability. Many start-ups failed to do this in the last year when they should have. However, others have done so, most notably perhaps Elon Musk at Twitter. Meta, Tesla, Amazon, Klarna and Microsoft have all shed jobs in the thousands.

It isn’t all doom and gloom though either. Politicians like hyperboles - let’s be wary of AI being painted as the harbinger of doom. Instead, let’s get a regulatory framework that is flexible and allows for core risks to be mitigated (e.g., the parameters/framework of use for AutoGPT) but is not an overreaction based on perceived fears of societal collapse. The opportunity this technology allows smart founders to access and leverage is immense. The challenge of building a start-up is now significantly reduced - both in terms of the monetary and also time costs. For this reason, the venture capital investor’s greatest challenge today is arguably convincing their own investor base to back them, now more than ever, notwithstanding the wider macro factors and fears.