GenAI startups biggest driver of unicorns, says VC firm Accel

STOCKHOLM, Oct 17 (Reuters) - Generative artificial intelligence (GenAI) companies have become the major driver of unicorns -- startups reaching $1 billion valuation -- with 60% of the new ones falling in this category, according to a report from venture capital firm Accel.

Funding in European and Israeli GenAI startups was close to $1 billion in the last 12 months compared with over $14 billion in U.S. ones, though skewed due to a $10 billion funding to OpenAI alone, the report said.

"A very limited number of companies which have attracted a disproportionate amount of the capital... the investment going into the foundational models - we will see that going down," Philippe Botteri, a partner at Accel, said in an interview.

AI foundation models, developed by Microsoft-backed OpenAI, Meta and others, are capable of generating text, images or other media in response to prompts.

Europe, home to AI startups such as AI video avatar platform Synthesia and Stability AI, is already producing 50% more AI publications than the United States with similar citation rate, according to the report.

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GenAI startups biggest driver of unicorns, says VC firm Accel
SophoTree Inc, Alexander D. Kostopoulos (ST) October 17, 2023
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GenAI investments surge, anticipated to hit $143 billion by 2027