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After years of booming growth, the AI industry is now experiencing a significant slowdown in investment, as detailed in a recent report from Stanford’s Institute for Human-Centered Artificial Intelligence (HAI). The report highlights a notable decrease in both private and corporate investments in the AI sector for the second consecutive year, with overall investments dropping by 20% in 2023 compared to the previous year, Kyle reports. Despite this general downturn, certain segments like generative AI continue to attract significant funding, indicating a selective yet substantial interest in specific AI applications.

AI investment is slowing down for a few reasons, like the crowded market and the steep costs of building big AI models. According to Gartner analyst John-David Lovelock, the money is now flowing more toward big, established companies that are strengthening their positions, while it’s getting tougher for new players to get a piece of the pie. Investors are getting pickier and want to see real, solid returns instead of just throwing money at hopeful growth. (That isn’t stopping them from raising billion-dollar funds focusing on AI, of course.)

Despite these hurdles, there’s still a strong belief in the future of AI, especially in ways it can boost efficiency and spark innovation across different sectors. Right now, the market is just going through a bit of a cleanup, shifting from the wild spending of the past to a more thoughtful and sustainable way of funding. This change is key to creating AI solutions that actually work in the real world and can truly change industries, and worm its way into our battle-weary hearts.

Oh, and before we pile into the rest of the startup news this week … Do you have a pitch deck that might be a good fit for my Pitch Deck Teardown series? You can submit yours here — I’d love to take a closer look and potentially share it with TechCrunch’s readers, along with an in-depth review!

Most interesting startup stories from the week

The Humane Ai Pin. Image Credits: Brian Heater / TechCrunch

Oh hey! Look! It’s the triumphant return of TechCrunch old-timer Anthony Ha, who writes that Airchat, the latest brainchild of Naval Ravikant and Brian Norgard, is here to revolutionize social media with its groundbreaking concept: people talking to each other — shocking, right? This app, which is essentially a high-tech walkie-talkie, lets you follow others, scroll through a feed, and interact with audio posts that are also conveniently transcribed for those who can’t stand the sound of human voices. It’s currently climbing the social ladder on the App Store, all while being invite-only because nothing screams exclusivity like needing a golden ticket to listen to strangers ramble. Whether this will genuinely reduce online squabbles or just make them more melodious remains to be seen.

Airchat is like a tech-centric coffee shop where everyone’s buzzing about the latest in Silicon Valley, complete with a transcription feature that even gets Pokémon names right — because priorities. But don’t get too excited; it’s invite-only, making it another Silicon Valley whisper network. And while it’s all fun and audio games, the platform’s laid-back approach to content moderation could make it the Wild West of voice chats, where the only sheriff in town is the mute button.

• Noname loses its unicorn horn: Noname Security, the cybersecurity startup that once strutted around with a $1 billion valuation, is now whispering sweet nothings to Akamai Technologies for a more modest $500 million.
• Dude, where’s my phone: In a world where your smartphone feels like an extension of your hand, Humane is pitching a $699 wearable, the Ai Pin, that promises to be the next big thing — and hardware editor Brian takes a deep dive into where the company came from … and where it might be going.
• Breaking out an army of ‘bots: Betaworks is diving headfirst into the AI pool, but instead of splashing around with the big LLMs, they’re floating a new idea — AI agents designed to tackle the mundane tasks we all love to hate. They’ve hatched nine of these digital minions from their latest “Camp” incubator, hoping to automate everything from email sorting to meeting scheduling.

Most interesting fundraises this week

Image Credits: Ramp / Ramp co-founders Karim Atiyeh, Eric Glyman and Gene Lee

Rippling, the HR tech darling that’s been vacuuming up venture capital like it’s going out of style, is at it again. This time, they’re passing around the Silicon Valley collection plate to the tune of $200 million in fresh capital, while also letting current shareholders cash out a cool $670 million. This latest fundraising fiesta, dubbed Series F, could puff up Rippling’s valuation to a breezy $13.4 billion. Not too shabby for a company that, just last year during the Silicon Valley Bank meltdown, had its CEO Parker Conrad frantically tweeting and dialing for dollars to make payroll. Now, with everyone writing record-breaking checks (and Coatue leading the round), it seems Rippling is less about the ripples and more about making waves.

• Ramping up rapidly: Ramp, the spend management startup that’s apparently allergic to profitability, has just bagged another $150 million to keep the lights on and the acquisitions rolling. Now valued at a cool $7.7 billion, Ramp is playing financial Tetris with a mix of old and new investors, including the star-studded lineup of Khosla Ventures, Founders Fund, and Sequoia Capital.
• And why do you think that is?: Two Chairs, the therapy startup that once championed the quaint notion of “actual human interaction,” has succumbed to the digital wave, swapping its stylish clinics for Zoom rooms. Fresh off a $72 million cash infusion, the company plans to keep expanding its digital domain, because while finding the right therapist online is still as tricky as a Sudoku puzzle, at least you don’t have to leave your couch to get disappointed.
• Dust yourself off and try again: Rivos, the chip startup that Apple once accused of playing “Catch Me If You Can” with its trade secrets, has somehow managed to turn its courtroom soap opera into a $250 million funding fiesta. After Apple’s lawsuit drama cooled down, Rivos didn’t just walk away; they sprinted back to the lab to crank out chips that might just give the iPhone maker a run for its money.

Other unmissable TechCrunch stories …

Every week, there’s always a few stories I want to share with you that somehow don’t fit into the categories above. It’d be a shame if you missed ’em, so here’s a random grab bag of goodies for ya:

• You’ve been hacked: Apple is playing the digital knight in shining armor by sending out mass “you might be hacked” notifications to iPhone users across 92 countries. This isn’t your garden-variety phishing scam but a full-blown spyware drama featuring shadowy attackers and possibly a cameo by the infamous Pegasus spyware.
• Tesla cuts staff: Tesla, in a classic pre-earnings panic move, decided to thin the herd by axing 14,000 of its workers, including some of the star players. Apparently, the electric car giant has been feeling the pinch from an ongoing EV price war, prompting a “company-wide restructuring” to supposedly boost productivity and brace for its “next phase of growth.” This corporate euphemism translates to cutting loose even high performers, particularly those unlucky enough to work on now low-priority projects.
• Humanoid robotics shake-up: A day after retiring the hydraulic model, Boston Dynamics’ CEO discusses the company’s commercial humanoid ambitions with electric options.
• Continuing to run Twitter into the ground: Elon Musk, in his latest bid to save his corner of the internet, has decided that the best way to tackle X’s bot epidemic is to hit new users where it hurts: their wallets. For the low, low price of an undisclosed fee, you too can prove your humanity and earn the privilege to post on the platform.
• Hello, is the doctor in?: Hugging Face is always up for a challenge. This time, it has decided to tackle the Wild West of AI in healthcare with its latest creation, Open Medical LLM. This new benchmark is essentially a Frankenstein’s monster of existing medical test sets, stitched together to see if AI can actually handle the big leagues of healthcare without accidentally suggesting leeches for a headache. It’s a noble effort to bring some standardization to the chaotic realm of generative AI, which has been thrown into healthcare settings with a mix of high hopes and crossed fingers.