Another eventful week has unfolded, revealing yet more substantial investments and soaring valuations in the AI sector.
DeepL, an AI language translation venture, secured $300 million with a valuation reaching $2 billion; Scale AI, a data-labeling platform catering to machine learning models, amassed $1 billion as its valuation almost doubled to $13.8 billion; and H, a nascent French startup developing frontier models, drew an astounding $220 million seed round at an unspecified valuation (though it almost certainly propels H into unicorn status).
While traditional institutional investors such as Accel, Index, and Y Combinator (YC) remain prominent, these investments highlight the corporate scramble to dive into the action while maintaining a cautious distance from regulators.
The quasi-merger
Consider Scale AI, a company that has historically attracted purely institutional and angel investors since its launch in 2016 through its Series E round in 2021. Similar investors participated in the Series F round, but notable new investors included Meta, Amazon, Nvidia, and the venture arms of Intel, AMD, Cisco, and ServiceNow.
On the same day of Scale AI’s Series F announcement, H revealed its investors: Amazon, Samsung’s venture arm, and UiPath, an automation software firm valued at $10 billion, had bought in as well.
Corporate investment in AI startups has become a significant trend over recent years, exemplified by Microsoft’s close relationship with ChatGPT-maker OpenAI. This deal has attracted scrutiny from antitrust regulators in the European Union and the U.K., amid concerns that Big Tech might be adopting a new “quasi-merger” strategy. This tactic seeks to gain control and influence over emerging technologies without outright ownership — examples include hiring the founding teams of startups or making strategic investments.
Microsoft reportedly holds a 49% stake in OpenAI, which may invite further scrutiny once European regulators complete their initial investigations — regardless of Microsoft’s voting influence in OpenAI.
Anthropic might face a similar situation. The three-year-old company has raised over $7 billion from various investors, including corporates like Google, SAP, and the venture divisions of Salesforce and Zoom. Notably, Amazon has contributed to more than half of Anthropic’s total fundraising, closing a $4 billion investment in March. While Amazon’s stake is not a majority one (similar to Microsoft’s in OpenAI), the U.K.’s antitrust regulator, the CMA, recently confirmed it was examining the deal to determine if it warrants an antitrust investigation.
Simultaneously, the CMA disclosed it was investigating Microsoft’s recent acqui-hire of Inflection AI (one year after Microsoft became Inflection’s largest backer), which involved Microsoft acquiring its founders and key staff to manage a new consumer AI unit, leaving a leaner Inflection AI focused on enterprise solutions.
The CMA also indicated it was exploring Microsoft’s recent $16 million investment in French AI startup Mistral. However, the regulator quickly determined that the deal didn’t merit investigation due to its scale.
“The CMA has reviewed information submitted by Microsoft and Mistral AI, along with feedback received in response to its call for comments,” a CMA spokesperson stated. “Based on the evidence, the CMA does not believe that Microsoft has gained material influence over Mistral AI as a result of the partnership, and thus the deal does not qualify for investigation.”
While Nvidia has not typically been grouped with the “Big Tech” giants, it has become a significant player in the AI surge. The company’s influence has grown enormously: valued at $770 billion a year ago, its market cap has soared to over $2.5 trillion, now placing Nvidia as the world’s third most valuable company, behind Microsoft ($3.17 trillion) and Apple ($2.87 trillion), but ahead of Meta ($1.18 trillion), Amazon ($1.88 trillion), and Alphabet ($2.15 trillion).
Nvidia has invested in AI startup Hugging Face, along with Amazon, Google, Qualcomm, Intel, and others. Additionally, Nvidia has acquired stakes in Cohere, Perplexity AI, Inflection AI, Cohesity, Mistral AI, Weka, Wayve, and many other AI startups.
Big Tech continues to invest heavily in AI startups, hoping that acquiring smaller equity stakes may allow them to pass regulatory scrutiny. However, this doesn’t mean these tech giants won’t exert some form of control over these companies. As stakeholders, they can influence startups in various subtle and overt ways.
