Andrew Ng Aims to Secure $120M for Upcoming AI Fundraising Initiative

Andrew Ng’s AI Fund Aiming to Raise Over $120 Million for New Venture Fund

Andrew Ng, a prominent figure in artificial intelligence, is planning to raise over $120 million for his second AI Fund, a startup incubator that supports small teams tackling significant challenges with AI innovations. An SEC filing reveals that the newly established AI Venture Fund II has already secured $69.75 million from 13 partners, leaving approximately $50 million still to be raised. Ng's team has not provided further comments.

As the figure behind Google's groundbreaking Brain project, co-founder of Coursera, and a recent member of Amazon’s board, Ng has long been a standout in the AI arena since his role as Baidu’s chief scientist from 2014 until 2017. After departing Baidu, he initiated several AI ventures, most notably DeepLearning.ai and Landing AI, which focuses on creating AI tools for the manufacturing sector.

Ng founded the AI Fund in 2018 with an initial capital of $175 million, where he serves as the General Partner (GP) guiding its strategy. According to the SEC filing, he is designated as the “managing member of the general partner” for AI Venture Fund II. This fund aims to provide essential support during the seed and Series A investment phases, enabling teams to operate discreetly until they are prepared for public engagement, all while leveraging Ng’s extensive professional network.

Notable initial investors in the AI Fund included Greylock Partners, New Enterprise Associates, Sequoia Capital, and SoftBank Group. Crunchbase indicates that the fund has invested in 38 portfolio companies, such as AI observability platform WhyLabs, Ng's own Landing AI, and the AI app-building tool Baseten.

Though AI Venture Fund II’s target of $120 million is significantly smaller than the first AI Fund's size, it still surpasses Ng's original aspiration of $50 million for this follow-up effort. This development could suggest a cooling off in the AI investment landscape, particularly within the rapidly evolving generative AI sector.

Recent reports from PitchBook highlight a decline in generative AI deals, with a staggering 76% drop in early-stage dealmaking over two consecutive quarters since its peak in Q3 2023. Pre-seed and seed-stage investment values fell to $122.9 million in Q1 2024, down from a previous high of $517.7 million in Q3.

This downturn may be partly attributed to caution among enterprises. A pair of recent surveys from Boston Consulting Group reveal that about half of participating C-suite executives believe generative AI will not deliver significant productivity improvements and express concerns regarding the risks of errors and data breaches associated with these technologies. As reported by my colleague Ron Miller last week, businesses are discovering the challenges of scaling generative AI implementations are greater than they initially anticipated, leading executives to adopt a more careful approach.