Mati Staniszewski couldn’t believe his luck. Barely more than a year after the 28-year-old founded a small AI start-up, it hit a $100 million valuation in June. “It’s exciting — we are lucky to be paving the way where others haven’t been before,” said Staniszewski, whose London-based company, ElevenLabs, auto-generates audio to dub films in English into foreign languages.
“Last year we approached tens of investors, and we were rejected by most of them — all the attention was on the metaverse and crypto companies,” he said.
“But this year everyone around us is so interested in AI, and we had loads of investors come to us. You have to take a big amount of money on board which brings a lot of responsibility… that was stressful.”
But there was no champagne-popping when ElevenLabs hit its nine-figure valuation milestone. Staniszewski had no time to celebrate — carving out just an hour of his day to head to an Italian joint on Portobello Road with his girlfriend to toast his achievement, before rushing back to work.
“There’s just so much intensity in this space — we see more and more companies trying to do the same thing as us,” he said.“My co-founder and I joke that there’s no distinction between weekdays and weekends anymore — every day is a work day.“Looking back, maybe I should have done more to celebrate.”
Staniszewski’s company is just one of hundreds of new tech firms that make up the AI revolution. A technology which not too long ago sat at the fringes of public discourse, largely confined to science fiction, has now taken centre stage in the business world, occupying far more of the lives of the biggest investors. They have poured tens of billions of pounds into the technology, intent on getting an early foothold in the industry.
This year everyone around us is so interested in AI, and we had loads of investors come to us. You have to take a big amount of money on board which brings a lot of responsibility… that was stressful.
Businesses are clamouring to showcase their AI capabilities, even if they haven’t yet got any and don’t expect to any time soon. In the US, the proportion of S&P500 companies — some of the biggest listed businesses on the planet — who now talk about AI in calls with shareholders has reached 32 per cent, according to banking giant Goldman Sachs. That shoots up to 80 per cent when you narrow the list down to technology companies. According to one analysis by consulting firm McKinsey, generative AI could add up to $4.4 trillion to the global economy, more than the entire GDP of the UK.
“There is a bit of a gold rush as there always is when new waves like this happen,” said Megha Prakash, senior investor at London-based venture capital firm Forward Partners.
“A lot of the premium for investing in these firms is based on FOMO and froth, but there is a body of consensus that sees this as a new opportunity.”
As investors throw more and more money behind this technological revolution, it is making a small number of people stinking rich.
OpenAI, perhaps the most famous AI business in the world after it launched ChatGPT last year, is believed to have added some $500 million to the wealth of its founder, Sam Altman, after a multi-billion-dollar funding round by Microsoft earlier this year.
And Sean Williams, founder of London-based AutogenAI, which generates draft proposals for government procurement bids, is estimated by the Standard to be worth as much as £48 million, after the firm completed a £17 million funding round in July.
Firms who can demonstrate that they play a vital role in the growth of AI are doing extraordinarily well too. US business Nvidia, which makes the computer chips used in AI-powered computers, has seen its share price rocket 218 per cent since the start of the year to reach a $1 trillion market value, leaving its founder Jensen Huang with a fortune of around $41 billion.
Much of the AI cash is being splashed in London, too. Since the start of last year, billions of pounds have been invested in London with many regarding the city as second only to Silicon Valley when it comes to the number of industry start-ups. That has led to the creation of dozens of new millionaires in the capital, with many more on the way.
In April, London-based Quantexa, which is run out of a WeWork in Waterloo and designs tools to combat financial fraud, hit a valuation of $1.8 billion after a $129 million funding round. In May, Builder.ai, which uses AI to help businesses build software, raised $250 million.
Some London firms have (wisely) changed their company names to include the word “AI” and have seen their valuations shoot up shortly thereafter. London firm Quench AI, an AI-powered personal learning coach, changed its name from Newmn in March and quickly collected $5 million in investment. In total, some 435 London companies with “AI” in their name were set up since the start of the year, according to data from Companies House, more than double the number set up in the whole of 2022.
“My guess is AI now is where say the internet was 25 years ago — new, fascinating, potentially terrifying and lots of firms looking to get a piece of the action, either to defend their existing business model or to demolish and disrupt someone else’s,” said Russ Mould, investment director at AJ Bell.
“There will be big winners and there will be big losers. No one, but no one, knows which will be which, so the policy that many adapt will be to spread their capital around and see if they can find one or two of the potential gems.”
But whether AI becomes as dominant a force as investors would have us believe, one thing is for certain: a huge number of jobs in the economy today will cease to exist not long from now, while a small but powerful group of tech titans will join the ranks of the super-rich. As many as 83 million jobs will be lost to AI over the next five years, according to estimates by the World Economic Forum, while countless millionaires and billionaires will be made over the same timeframe as a direct consequence.
AI now is where say the internet was 25 years ago — new, fascinating, potentially terrifying and lots of firms looking to get a piece of the action.
There could be huge societal cost to this wealth shift. What will the world look like if tech CEOs emerge as the plutocrats, deciding day by day which jobs will and won’t be automated, while the rest of us pray we will still be able to come into work tomorrow?
Some believe this view is alarmist. Ravin Jesuthasan, Global Transformation Leader at consulting firm Mercer, said: “Despite all the hype about AI destroying jobs, we know from decades of research since AI first emerged in the mid-Fifties that its impact is far more nuanced.” Repetitive rules-based work will go, he added, but it will be replaced by data science jobs and the emergence of prompt engineering, a role in which humans are trained to prompt large language models to deliver the right results.
Some employees are welcoming the change. Fifty four per cent expect (or have already seen) positive changes in their workload due to AI or automation, according to a Mercer survey.
Others are also wonder whether all the excitement around the growth in AI is misplaced. “AI won’t be ready to run the world anytime soon, if ever,” veteran economist and columnist Tyler Cowen wrote last month. “If there is one thing that smart people need to recognize, it is that not everything is a matter of intelligence.”
“Some of the fears are justified [but] the replacement of manual workers has been happening for a while and will continue on regardless,” Prakash said.“If managed well, it will help us have more leisure and better managed collective resourcing. In 20 years’ time the world will be a much better place.”