Author: Li Xiaoyin, The Wall Street Journal
Artificial intelligence is creating wealth at an unprecedented speed and scale, giving rise to a new group of billionaires.
According to CB Insights data, there are currently 498 AI 'unicorn' companies globally valued at over $1 billion, with a total value of $2.7 trillion. Among them, 100 were established in 2023 and beyond, and the number of companies valued at over $100 million has exceeded 1,300.
The core of this wealth feast is the astonishing fundraising ability and skyrocketing valuations of AI startups. Anthropic is negotiating to raise $5 billion at a valuation of $170 billion, nearly doubling its valuation since March. Thinking Machines Lab, founded by former OpenAI CTO Mira Murati, completed a $2 billion seed round in July, setting a record for the largest seed round in history.
This round of wealth creation is not limited to startups; the soaring stock prices of publicly listed tech giants like NVIDIA, Meta, and Microsoft, along with the booming data center and other infrastructure companies, together form the panoramic view of this AI wealth explosion.
Andrew McAfee, Chief Researcher at MIT, stated:
"Looking back at the data from the past 100 years, we have never seen such a scale and speed of wealth creation, which is unprecedented."
A new group of billionaires is rapidly emerging
This year's major funding rounds are rapidly creating new billionaires. According to Bloomberg's estimates in March, the four largest private AI companies have created at least 15 billionaires, with a total net worth of $38 billion. Since then, more than a dozen unicorn companies have emerged.
According to media reports citing informed sources, Dario Amodei, CEO of Anthropic AI, and his six co-founders are now likely billionaires with fortunes in the billions. Additionally, Anysphere was valued at $9.9 billion during a financing round in June, and a few weeks later reportedly received valuation offers between $18 billion and $20 billion, likely making its 25-year-old founder and CEO Michael Truell a billionaire.
It is worth noting that most current AI wealth still exists in 'paper wealth' form in unlisted companies, making it difficult for founders and equity holders to cash out immediately.
Unlike the internet bubble of the late 1990s when many companies rushed to IPO, today's AI startups can remain private for longer due to continuous funding from venture capital, sovereign wealth funds, family offices, and other tech investors.
Although IPO channels have narrowed, the new AI elites do have routes to convert paper wealth into liquidity. The rapid development of the secondary market provides them opportunities to sell equity, and structured secondary sales or tender offers are becoming increasingly common.
The secondary stock sale negotiations that OpenAI is conducting are a typical example, aimed at providing cash for employees. Additionally, many founders can also borrow against their equity.
Mergers and acquisitions are another important liquidity event. According to CB Insights, there have been 73 liquidity events in the AI sector since 2023, including mergers, IPOs, reverse mergers, or majority stake acquisitions.
For example, after Meta invested $14.3 billion in Scale AI, its founder Alexandr Wang joined Meta's AI team. Meanwhile, Scale AI co-founder Lucy Guo spent around $30 million on a mansion in the Hollywood Hills of Los Angeles, thanks to her equity wealth after leaving the company in 2018.
Wealth creation is highly concentrated in the Bay Area
This wave of AI enthusiasm is geographically concentrated in the San Francisco Bay Area, reminiscent of Silicon Valley during the internet era.
According to data from the Silicon Valley Regional Research Institute, Silicon Valley companies received over $35 billion in venture capital last year. Additionally, reports from New World Wealth and Henley & Partners indicate that the number of billionaires in San Francisco has now reached 82, surpassing New York's 66. Over the past decade, the millionaire population in the Bay Area has doubled, while New York's increase is 45%.
The influx of wealth has directly boosted the local economy. According to Sotheby's International Realty data, the number of homes sold in San Francisco for over $20 million last year hit a record high. A city that faced a 'doom loop' a few years ago is now seeing a significant increase in rents, home prices, and demand due to AI-driven demand.
McAfee stated:
"The concentration of this AI wave geographically is shocking. Those who know how to found, fund, and grow tech companies are all there. For 25 years, I've heard people say 'this is the end of Silicon Valley' or that some place is 'the new Silicon Valley,' but Silicon Valley remains Silicon Valley."
The wealth management industry faces new opportunities and challenges
Over time and with the potential for future IPOs, the enormous wealth created by these private AI companies will eventually become more liquid, bringing historic opportunities to the wealth management industry.
According to technology consultants, all mainstream private banks, large brokerages, and boutique investment banks are actively reaching out to AI elites, hoping to win their business.
However, serving this new elite is not an easy task. Simon Krinsky, Executive Director and Managing Director of Pathstone, pointed out that most AI wealth is still locked in illiquid private equity. He believes that the proportion of illiquid wealth among new AI billionaires is much higher than that of employees who previously worked at large publicly listed companies like Meta or Google.
Krinsky expects that AI billionaires will follow a similar behavioral pattern to the internet elites of the 1990s: initially using excess liquidity to invest in similar tech companies known through personal networks, and after experiencing high volatility and concentrated risks in the speculative industry, ultimately turning to professional wealth management services for diversification and professional protection.
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