Inflection AI Raises $1.3 Billion Amidst Rising Valuation Questions in Generative AI Sector

Inflection AI Raises $1.3 Billion Amidst Rising Valuation Questions in Generative AI Sector
Image Credit: Inflection AI

Inflection AI, an AI startup focused on building personal AI assistants, announced today that it has raised $1.3 billion in funding led by Microsoft, Reid Hoffman, Bill Gates, Eric Schmidt, and new investor NVIDIA. The startup, founded just over a year ago by Karen Simonyan, Mustafa Suleyman and Reid Hoffman is now valued at a staggering $4 billion. The large funding infusion highlights the runaway enthusiasm around generative AI, and harks back to the boom-bust cycle of the early dot com era.

With its new funding, Inflection AI plans to continue developing its first product, Pi, which launched earlier this year. Pi is a personal AI assistant designed to provide helpful information and advice through text and voice conversations. Pi is powered by Inflection-1, Inflection's own foundational model, which the company claims outperforms models like GPT-3.5, LLaMA, Chinchilla, and PaLM-540B on a wide range of benchmarks.


However, in our tests, Pi still seems quite limited compared to other conversational AI systems. Despite Inflection's claims, Pi was unable to match the capabilities of OpenAI's ChatGPT, Google's Bard or Anthropic's Claude. Inflection is quick to point out that this is by design.

It is worth noting that the results we present in the memo are those of the Inflection-1 foundation model which has not undergone any fine-tuning or alignment. Pi is powered by Inflection-1 which has been further transformed through a proprietary adaptation process to become a useful and safe personal AI.

Inflection touts that it has a "vertically integrated AI" approach, handling everything from data to models to infrastructure. The company is currently building one of the world's largest AI supercomputer cluster with 22,000 NVIDIA H100 GPUs (that it says will be operational later this year). But, it is important to stress that more compute power alone will not solve the many technical challenges of creating a truly "personal AI for everyone".

The huge funding and valuations that generative AI companies like Inflection AI are attracting may be a warning sign that investors are getting well ahead of the technology, and their enthusiasm may be outpacing real progress. The hype surrounding the space brings real risks of overpromising and underdelivering. While AI research and progress is advancing daily, the adaptable, broad, and flexible intelligence that would be required for truly useful personal assistants remains elusive.

To be clear, I am rooting for Inflection's success, and would want nothing more than "a personal AI that is truly on [my] side and always puts [my] best interests first". But oversized valuations awarded to young companies navigating a technology that is truly still in its infancy demand a critical, cautious optimism. Investors risk getting caught up in hype and may end up disappointed.

This is an exciting time for AI if we can pursue progress with patience, pragmatism, and care. This requires solving many technical challenges and demands a long-term vision with a commitment to responsible investment.

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