Can Open-Source AI Thrive?

Author

Alpha
March 26, 2024

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∆ Tech in the News

$DWAC - Donald Trump's Truth Social is going public after winning a merger vote in a deal worth ~$6B and netting Trump ~$3B personally.

Break-Ups Are Hard - Google and Apple could face a corporate breakup as EU and US antitrust regulators crack down on alleged anti-competitive practices.

OpenAI x Hollywood - OpenAI is courting studio, director and talent partnerships for its unreleased Sora AI video generation tool.

ELVIS Act - Tennessee signed a bill into law protecting musicians from AI deepfakes, banning commercial use of AI-imitations without permission.

Musk Rebuffed - X’s lawsuit against UK-based, George Soros-funded pro-censorship lobby group Center for Countering Digital Hate (CCDH) was dismissed summarily.

The Hottest Thing in Tech this Week

Instability and Challenges for Open-Source AI

The CEO of open-source image AI unicorn Stable Diffusion, Emad Mostaque, has resigned amid rumors he was pushed out over a dispute around an open source vs commercialization focus. As one of the only players committed to open-sourcing its most powerful AI models, Stable Diffusion has formed a loyal user community but has struggled to monetize and satisfy its VC backers.

The rumor mill specifically suggests the board and Mostaque clashed over whether to open-source the hotly anticipated SDXL-3 model. His explanation for resigning: “you’re not going to beat centralized AI with more centralized AI.”

Shifting Attitudes?

Things may look pretty bleak for open-source startups, however, there are some countervailing trends to watch. For one, a new a16z report on Enterprise AI surveyed Fortune 500 and top enterprise leaders and found the following:

  • 80-90% utilized closed-source models in 2023;

  • 60% want to increase their open-source usage in 2024;

  • 46% now prefer open-source.

This finding makes sense as CEOs increasingly want to fine-tune their models on proprietary data for specific use cases and keep that data private from big tech.

The Unified Acceleration Foundation (UXL)

Meanwhile, a major boost for open-source AI has emerged with the launch of this coalition of tech companies including Qualcomm, Google and Intel that is challenging Nvidia’s AI chip lock-in with open-source software and tools to power AI accelerator chips. The coalition’s first product is OneAPI, an open standard by Intel to eliminate specific coding languages, code bases, and other tools from locking devs into specific architectures like Nvidia’s CUDA platform.

Still, open-source AI startups will be hoping innovative new revenue models can start paying off ASAP to give them breathing space to resist VC demands.

“Custom models, consulting and more are huge markets and very reasonable business models as we enter enterprise adoption over the next year or so, last year was just testing.”

― Emad Mostaque, Former CEO of Stable Diffusion

Job Candidates (For Employers)

Looking for Talent? Reach if you are hiring and would like a ‘Warm Intro’—> [email protected].

  1. MRI Software Engineer, ex-Epicor Product Developer Intern. Built Chatty, BookStore, and JOTE projects. Nitte Meenakshi Institute of Technology BE in CS.

  2. Meta Technical Recruiter for ML/AI roles, 98% candidate response rate, 70% hire rate. Led training for 135 sourcers. DEI champion.

  3. Founder & CTO of Telemedicine Platform, ex-CTO at CastCloud (clients: HBO, ABC, Disney) and GoRomeo. PhD Bioengineering, UIC. Invented telemedicine & data integrity platforms.

  4. Head of Network & AI Architect at Axis Networks. Expertise in ML, DL, LLMs. Harvard ML cert, IBM/Microsoft AI & Data Science certs.

Want to be Featured? Join our Tech Buzz Talent Pool to match to top jobs in tech » apply here

Deals We’re Watching

Founders to Watch and Opportunities to Catch

Open Deals:

Looking to invest? Let us know if you want a warm intro —> [email protected]

  1. Simplifying the entire tax process - US Based - Using AI to eradicate manual tasks and errors and make the tax process simple and efficient. Previous YC. (Pre-seed)

  2. VC firm specializing in Enterprise/B2B software - Seed-stage investments. $40M allocated to 30 companies, 2 IPOs and 7 M&A exits. $4.5B in follow-on capital from major VCs like Insight Partners, NEA, and Sequoia.

  3. Compliant IOT solution for hospitals to track their data - San Diego, CA - 25% cheaper IOT tracking device than competitors, 6 utility patents and 20+ pending. Team has had significant past exits and raises and seeks growth funds. (Seed)

  4. Enterprise AI to drive insights from company data - NYC - Current customers incl. Pfizer, Lacoste, & Hotel Engine, $1M in ARR, 7x growth in ’23. (Seed)

Raising for your startup? Send us your Open Round —> [email protected]

Closed Deals:

AI-driven Protein Design - Berkeley startup Profluent raised $35M from Spark Capital, Insight Partners, Air Street Capital and notable angel investors.

AI Accounting - Cloud-based AI accounting platform developer FundGuard raised a $100M Series C from Key1 Capital and strategic investor State Street.

Accelerating AI - San Jose’s Eliyan closed a $60M Series B from Samsung Intel, and Tiger Global to produce chiplet interconnects to speed up AI chips.

Enterprise SaaS - San Jose startup AiDash closed a $50M Series C backed by strategic investor, Sanbanci Climate Ventures, Edison International, and Shell.

Arc Browser - New York startup The Browser Company closed a $50M round at $550M to further its AI-powered search and monetization strategy.

Blockchain Sequencing Marketplace - Calif. startup Espresso Systems closed a $28M Series B led by a16z for a marketplace enhancing rollup interoperability.

Companies to Watch:

AI-Based Avatars - LA Avatar generation platform HeyGen is aiming to raise $60M at $440M, 6x higher than Nov ‘23. Benchmark, the early-stage VC that bet early on Snap and Uber, is leading the round

Drone Ops - Sam Altman-backed Seattle startup Brinc debuted its unified 'LiveOps' software to support ERTs with its’ crash-proof drones with integrated internet & comms. Brinc has raised $80M to date from Index, Tusk, & Next Play.

CoreWeave, The NJ AI Data Center startup is reportedly raising primary and secondary shares at a $16B valuation, 2x above its last round in December.

The Funding Buzz

Y Combinator - Raising $2B+ across three new funds, offering backers exposure to its next four startup batches and follow-on investments.

Acre Venture Partners - The California firm closed its third fund at $140M to back agrifood tech startups between pre-seed to Series B stages.

BlackRock - Debuted BUIDL, its first tokenized fund on Ethereum. Seeded with $100M USDC, it provides qualified investors with a new way to earn USD yields through subscriptions via Securitize Markets.

Alphatron Capital (Formerly SMK Ventures) - The US-based firm secured $30M towards its debut fund offering US investors exposure to Indian Tech across enterprise SaaS, fintech, healthtech, AI/ML, digital content, and D2C.

Google - Releases API for Gemini 1.5 Pro model with 1M token window and expands "experimental" AI search tool, SGE to a subset of U.S. users.  

Midjourney - Building tools for 3D world simulation.

Lindy - Platform to build AI agents that automate workflows.

Gatekeep - Makes text-to-video AI educational explainer videos.

Buzzy Tech

HippocraticAI - Partners with Nvidia on $9/hr AI agents outperforming nurses.

Stanford - Quiet-STaR training method lets AI ‘think’ before responding.

Google -  HeAR AI system could detect Covid/TB by analyzing breathing.

"Down-Less Down Jacket" - Nanoparticle material can block or produce heat.

That’s a wrap! If you would like to connect with any of the candidates or startups we are speaking with, reach out.

Candidates —> [email protected]

Startup Founders —> [email protected] 

And If you are a founder and are raising money, make sure to reach out. We are making hundreds of intros every month to real investors.