Generative AI startups have particularly benefited from the boom, attracting more than $18 billion in VC funding in 2023, according to Air Street Capital's State of AI report, released on Thursday.
One of the main challenges facing AI startups right now is that they need to process large amounts of data in order to generate their high quality output.
An alternative could be that financial institutions, such as banks, launch GPU debt funds that replace VC equity dollars that would otherwise be spent on compute funding, the report's authors predicted.
GPU debt funds are also an attractive option for regulators, who are "keen to encourage responsible non-dilutive funding," which usually "carries fewer regulatory requirements than equity financing," Benaich said.
"I don't think GPU debt funds are going to happen overnight, but with interest rates still high, private credit is becoming increasingly appealing," Benaich told Insider.
Persons:
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