Venture capitalists are facing a difficult situation nearly three years into a virtually dormant IPO cycle.
Richly valued artificial intelligence firms abound in the private sector; some have been dubbed “generational companies.” AI, however, is not going to help venture firms in need of exits anytime soon.
That’s because VCs aren’t at the centre of this tech boom like they were in previous ones. Rather, billions of dollars have been invested by the largest players in the market, including Microsoft, Amazon, Alphabet, and Nvidia, to support the expansion of capital-intensive businesses like OpenAI, Anthropic, Scale AI, and CoreWeave.
The typical urge to go public doesn’t apply since some of the world’s most well-capitalized businesses are opening their wallets to fund the generative AI frenzy. Even if they did, the group of entrepreneurs in question is far from exhibiting the profitability indicators that potential investors require to see before making a commitment.
Source (CNBC)
