AI Funding Weekly: Issue #15

Restrictions on US chips leaving the country grows as the AI arms race continues

Hello, happy Wednesday, and welcome to Issue #15 of the AI Funding Weekly Substack. I’ve been doing a bit of research on the best day/time to send a newsletter/Substack like this and it sounds like Wednesday and Thursday morning could be the most optimal. So I’m taking Wednesday morning for a spin!

Okay, now to the world of AI - the top news this week centers around the growing global race for AI chips. This week the US announced it would further curb the export of AI chips to China, expanding previous restrictions made in Q4 of 2022. Here’s the skinny:

The Biden administration on Tuesday announced additional limits on sales of advanced semiconductors by American firms, shoring up restrictions issued last October to limit China’s progress on supercomputing and artificial intelligence.

The rules appear likely to halt most shipments of advanced semiconductors from the United States to Chinese data centers, which use them to produce models capable of artificial intelligence. More U.S. companies seeking to sell China advanced chips, or the machinery used to make them, will be required to notify the government of their plans, or obtain a special license.

To prevent the risk that advanced U.S. chips travel to China through third countries, the United States will also require chip makers to obtain licenses to ship to dozens of other countries that are subject to U.S. arms embargoes.

The Biden administration argues that China’s access to such advanced technology is dangerous because it could aid the country’s military in tasks like guiding hypersonic missiles, setting up advanced surveillance systems or cracking top-secret U.S. codes. Leading A.I. experts have warned that the technology, if not properly managed, could pose existential threats to humanity. (Source - New York Times)

The last paragraph here is a bit chilling. At the core of these restrictions is broader concerns around AI being used for war. While I hope this never happens, it’s hard to imagine it not happening and IMHO restrictions like this will only slow down the inevitable, not stop it.

At the end of the day I think this move is going to push countries like China to put more funding into making their own AI chips. The US will likely keep a healthy lead, but if anyone can play catch up in the chip manufacturing game, it’s China.

In the context of my Substack, I think the need for AI startups that are used to both prevent and thwart AI used for bad (i.e. war) is likely going to grow. And like any new technology there will always be people who use it to do bad things, in modern warfare computers play a crucial role, but we aren’t seeing public outcry for the abolishment of computers.

One more news story that caught my eye this week that likely will catch yours too this this one from Bloomberg:

The article highlights the fact that funding is down across just about every sector, except for AI, which is absolutely on fire right now. You can read the full story here.

While we can’t stop the evolution of technology, but we can keep focus on AI used for good and for AI companies that even prevent AI from being used for bad. As you all probably know by now, I’m a glass-half-full kind of guy so I see a bright future where AI startups can make a real impact in the world, in a very positive way. And on that note, let’s get to the good stuff - below are three AI startups that just landed new funding this week.

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Leucine - $7M Series A

Ah paper, the thing we used to use for everything that is slowly but surely going the way of the Dodo. And thanks to Leucine, an industry that has relied on paper longer than most is making the digital transition, with the help of AI.

Leucine is focused on revolutionizing the pharmaceutical manufacturing world by digitizing the shop floor and then interweaving AI to optimize how pharmaceutical companies manufacture products.

This is a bit complex to understand so I think a picture really is worth 1,000 words here - and this picture showing what Leucine’s products actually do I think illustrates it best:

Leucine is based in New York and the latest round of funding was led by a strategic - Ecolab.

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Riffusion - $4M Seed

Okay, this one was just too interesting to pass up, and bear with me as it might sound crazy at first, but let’s be honest, often the coolest things do sound crazy, at first.

Riffusion is a startup that allows you to create music using images of audio. Yes, you read that right - give Riffusion images of audio, and it creates some rockin’ tunes for you.

With buzz around the intersection of AI and music, and mentions in research papers from companies like Meta and TikTok, Riffusion round a market, and a pretty cool advisor too - The Chainsmokers.

So it shouldn’t be wildly surprising that yesterday the startup announced $4M in Seed funding led by Greycroft. What are they planning on using the money for? Here’s the dets:

Riffusion is also launching a new, free-to-use app — an improved version of last year’s Riffusion — that allows users to describe lyrics and a musical style to generate “riffs” that can be shared publicly or with friends.

“[The new Riffusion] empowers anyone to create original music via short, shareable audio clips,” Forsgren told TechCrunch in an email interview. “Users simply describe the lyrics and a musical style, and our model generates riffs complete with singing and custom artwork in a few seconds. From inspiring musicians, to wishing your mom ‘good morning!,’ riffs are a new form of expression and communication that dramatically reduce the barrier to music creation.” (Source - TechCrunch)

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Reality Defender - $15M Series A

Last but not least I had to cover Reality Defender because they’re a player in a space I think is going to see a lot of growth over the next few years - detecting deepfakes.

Let’s face it, we are moving into a world where you can see a video of something and honestly have no idea if what you’re seeing is real or not. Deepfakes may be somewhat of a novelty now but they’re quickly becoming a complex problem.

Enter Reality Defender, a startup led by a previous VP at Goldman Sachs, Ben Colman. He sees new methods of generating deepfakes only accelerating over time and the need for ways to detect them and determine what’s real and what isn’t as a massively growing space.

This latest round was led by DCDV and the proceeds will be used to double the current team from 23 to 46 with the core goal of further improving its content detection models.

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And that’s it for this week - as always thanks for reading and I’ll see you in a week!