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Family offices double down on AI investments as startup fundraising breaks record in February
Laurene Powell Jobs attends the Clinton Global Initiative 2024 Annual Meeting at New York Hilton Midtown on September 24, 2024 in New York City.
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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high net worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Fears of an artificial intelligence bubble roiled the stock market in February, but investment firms of ultra-wealthy families still made bullish bets on high-flying AI startups.
For instance, Laurene Powell Jobs’ investment and philanthropy firm Emerson Collective joined a $1 billion fundraise for AI developer World Labs last month. World Labs’ first product, Marble, allows users to create and edit 3D world models with text and image prompts. And Indian billionaire Azim Premji’s namesake family office also participated in a $315 million Series E round for Runway, an AI video generation startup.
In February, family offices made 41 direct investments in companies, nearly all associated with AI, according to data provided exclusively to CNBC by private wealth platform Fintrx.
World Labs and Runway are in good company. AI-related startups raised $171 billion in February, pushing the month’s total startup funding from all investors to a record $189 billion, according to Crunchbase data. Rounds by Anthropic, OpenAI and Waymo drew the lion’s share of the funds, while four other companies, including World Labs, garnered ten-figure rounds.
In other family office deals, Hillspire, the firm of ex-Google CEO Eric Schmidt and his wife, Wendy, invested in a novel startup that could benefit the rest of its AI portfolio. Last month, the firm joined a $150 million Series B for Goodfire, which aims to understand how AI models work in order to improve them.
Schmidt warned at a conference in October that AI models are susceptible to hacking for malicious purposes. However, he said he is generally optimistic about AI and doesn’t buy comparisons to the dot-com bubble of the early 2000s.
“I don’t think that’s going to happen here, but I’m not a professional investor,” he said. “What I do know is that the people who are investing hard-earned dollars believe the economic return over a long period of time is enormous. Why else would they take the risk?”
Heineken has announced a substantial investment exceeding £44 million into hundreds of its pubs across the UK, a move expected to create approximately 850 jobs.
The Dutch brewing giant’s Star Pubs operation, which manages 2,350 sites nationwide, is undertaking this significant financial commitment despite a challenging period for the pub sector.
The industry has faced considerable pressure over the past year, grappling with escalating labour costs and increases in national insurance contributions.
Concurrently, consumer spending has been constrained by concerns over inflation and rising unemployment, further impacting pub revenues. However, pubs did receive additional business rates support from the government last month, aimed at alleviating some of these financial burdens.
Lawson Mountstevens, managing director of Star Pubs, indicated that the investment strategy is partly designed to bolster revenues and help the group navigate the recent “sustained increases in running costs”.
This year, £44.5 million will be allocated to upgrades for 647 pubs. A notable 108 of these venues are earmarked for particularly significant cash injections, with each transformation costing at least £145,000.
Heineken clarified that while the majority of its pubs are group-owned, they are independently operated by local licensees. A key focus for this investment, particularly in the lead-up to the 2026 football World Cup, will be on sports-focused venues.
The pub firm and brewer has a history of significant investment in British pubs, having pumped £328 million into the sector since 2018. Work has already commenced at 52 locations, including eight projects dedicated to reopening boarded-up pubs that have endured lengthy closures.
Mr Mountstevens also urged the government to reduce the tax burden on pubs, arguing it would ease cost pressures and foster further job creation within the industry.
He stated: “We can only do so much; the root-and-branch reform of business rates that the industry has been calling for over many years is urgently required, as well as a lowering of the burden of taxation on pubs, including VAT and beer duty.”
He concluded with a direct appeal: “We are calling on the Government to support us in bringing out the best in the Great British pub.”
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