Sapphire Ventures plans to invest more than $1 billion in enterprise AI startups

VC firm Sapphire Ventures says it plans to invest more than $1 billion in AI-related startups, indicating strong interest among investors for cutting-edge AI technology.

Reuters report that $1 billion of capital will come from the existing Sapphire fund, which has $10 billion under management and approximately $3 billion waiting to be deployed. The majority will be direct investments in AI startups, while some will go into early-stage AI-focused venture funds through Sapphire’s limited partner fund, Sapphire Partners.

Sapphire co-founder and CEO Nino Marakovic said that Sapphire will focus primarily on business-to-business software companies that “make AI accessible” by “utilizing data to better predict outcomes”. Beyond this, the company will support AI and machine learning startups to increase revenue for certain business verticals, such as manufacturing and healthcare.

“AI represents a profound technological change, and our $1 billion commitment reflects our belief in the opportunity,” Marakovic said in a statement. “We believe companies are just starting to see the benefits of AI and GenAI, in particular. In the near future, we predict there will be a massive AI-driven productivity boom that will benefit workers at every level and create value across the global economy. We are eager to support the next wave of enterprise innovators driving this evolution.”

As part of the $1 billion push, Sapphire also intends to create an “AI Community” as part of its Sapphire Community platform for CEOs and portfolio company executives. And it will continue to apply AI across its internal workflows and incorporate AI tools across work functions to “help drive efficiency,” said Marakovic.

AI startups, fueled by the hype around generative AI, continue to perform very well relative to the broader market — collectively raising $15.5 billion this year, according to to PitchBook data. Deal pace has remained steady, and the average post-cash valuation for AI firms is up 109.8% from last year.

If the best predictions come true, the investment can pay dividends. AI has the potential to contribute $15.7 trillion to the global economy by 2030, PwC recently report found, while the generative AI market alone could add as much as $4.4 trillion annually to the economy, according to to McKinsey. (That’s assuming that loss of a job the gains from adopting AI don’t outweigh productivity gains, of course — which is far from a guaranteed thing.)

Austin, Texas-based Sapphire, whose AI investments include Clari, DataRobot, Moveworks, and ThoughtSpot, isn’t the only company risking big bucks on AI ventures. Corporate weapons are also being increasingly utilized in this sector, pursuing huge potential windfalls.

Salesforce Ventures, Salesforce’s VC division, plans to pour $500 million into startups developing generative AI technologies.

Working days recently adding $250 million to an existing VC fund specifically to support AI and machine learning startups. OpenAI, the company behind the viral ChatGPT chatbot, has raised $175 million to invest in AI startups. Last month, Dropbox launched a $50 million AI-focused venture fund. And AWS said a few weeks ago that it aims to put $100 million into a program to fund generative AI initiatives.

Accenture and PwC, meanwhile, have announced that they plan to invest $3 billion and $1 billion respectively in AI.

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