AI mogul Andrew Ng's AI Fund, a startup incubator that supports small teams of experts trying to solve important problems using AI, is planning to raise more than $120 million in its second round of funding.
AI Fund's second fund, AI Venture Fund II, has raised $69.75 million so far from 13 partners, with about $50 million remaining to invest, according to an SEC filing. An AI Fund spokesman declined to comment.
Ng, founder of the Google Brain deep learning project, co-founder of Coursera and recently appointed to Amazon's board of directors, was one of the best-known figures in the AI community when he became Baidu's chief scientist in 2014. He left Baidu in 2017 to launch several AI ventures, including the Deeplearning.ai course and Landing AI, a startup that develops AI tools targeted at manufacturing companies.
Ng launched AI Fund with $175 million in 2018, shepherding its direction as the incubator's general partner. (In the SEC filing mentioned above, he's listed as “managing general partner” of AI Venture Fund II.) The idea was to provide money at the seed and Series A stages of a company's lifecycle, allowing teams to work in relative seclusion until they were ready and connecting them with Ng's extensive network of experts.
Early backers of the AI Fund included Greylock Partners, New Enterprise Associates, Sequoia Capital and SoftBank Group Corp. Crunchbase lists 38 portfolio companies, including AI observation platform WhyLabs, Ng's own Landing AI and AI app-building tool Baseten.
AI Venture Fund II has raised $120 million, significantly smaller than the first AI Fund tranche, but still more than double the $50 million that Ng originally hoped to raise as a follow-up to the AI Fund.
Take this as another potential sign that the AI bubble, and especially the much-talked-about generative AI segment of it, is deflating.
Pitchbook recently reported that early-stage generative AI deals fell for the second consecutive quarter, plummeting 76% from their peak in Q3 2023. VC deal value in pre-seed and seed-stage deals fell to $122.9 million in Q1 2024, down from a high of $517.7 million in Q3.
This may be due to companies' passive attitude.
In two recent surveys by the Boston Consulting Group, nearly half of respondents—all of them chief executive officers—said they don’t expect generative AI to deliver significant productivity gains and are concerned that generative AI-powered tools could lead to mistakes and data leaks. As my colleague Ron Miller wrote last week, companies are finding that implementing generative AI at scale is harder than they previously thought, and executives are becoming cautious.