Funding for AI foundational model companies surged by over 100% in 2024, with more than $40 billion invested, largely concentrated in a few major players like OpenAI, Anthropic, and xAI, according to PitchBook data. Smaller venture capital firms are pivoting away from foundational models, which require massive capital, and are instead focusing on applications and support services like privacy, security, and industry-specific solutions. Experts suggest that smaller VCs are better positioned to capitalize on these emerging opportunities, which require less funding and are driven by the ripple effects of the AI platform shift.
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