AI Market Bubble and Unprecedented Growth: Investors Warn of New Era Risks

The development of Artificial Intelligence (AI) technologies has triggered unprecedented speed in financial markets. At the StrictlyVC event organized by TechCrunch, industry experts analyzed the current situation and discussed new rules for investing. A conversation featuring M13 co-founder Carter Reum and Basis Set Ventures partner Chang Xu focused on the hype surrounding AI infrastructure and the viability of startups. This is reported by Techcrunch.com news states.

Chang Xu noted that the growth rates we are witnessing today are unprecedented in history. For example, ChatGPT managed to increase its revenue from $1 million to $40 billion in just six months. Such indicators are completely transforming traditional business models. According to the investor, some startups with teams of only 20 people are increasing their revenue from $10 million to $70 million within a year, demonstrating how hungry the market is.

The struggle between innovators and tech giants

Carter Reum believes that the current cycle differs fundamentally from previous technological revolutions (such as the cloud computing or iPhone era). While innovators previously competed with each other, they are now forced to fight against the ten richest and most powerful tech giants in the world. Corporations like Apple, Google, and Microsoft possess not only massive capital but also vast databases and the finest talent.

Consequently, the primary goal for small startups has become avoiding being swallowed or pushed out of the market by large companies. Reum emphasizes that "moats" play a crucial role in this process. That is, startups should focus on sectors where tech giants have not yet arrived or where regulation is complex, such as healthcare or government service systems.

A new approach to investing

While the market is changing rapidly, investors are taking precautionary measures when evaluating projects. According to the Basis Set Ventures strategy, investments are made in two directions: "under" and "on top of" the AI system.

• Infrastructure under AI: Databases, version control, and deployment tools. While these were previously created for humans, they are now being redesigned for AI agents.
• Solutions on top of AI: Products with long-term differentiation and technical protection.

According to ixbt.com, many investors call the current state a "paradoxical era." On one hand, company valuations seem to be rising unjustifiably; on the other, their real revenues are justifying these valuations. However, basing every deal solely on mathematical calculations can be risky, as platforms like OpenAI or Anthropic could launch a new feature at any time and wipe out the businesses of dozens of startups.

In conclusion, these trends are not foreign to the Uzbekistan technology market. Instead of competing with global giants, local startups can achieve success by offering AI solutions based on unique national data and in complex regulated sectors.