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Since its discrete release in late November, ChatGPT has become one of the fastest growing apps ever and pushed Microsoft and Google to rush out projects that had until now stayed carefully guarded over fears that the technology wasn't yet ready for the public.
"Just five days after its release, a million people used ChatGPT - about 60 times faster than it took Facebook to reach one million users," said Wayne Hu, a partner at SignalFire, another venture capital firm..
"The explosion of generative AI comes at an otherwise morose time for the tech sector, with tens of thousands of layoffs cascading through the world's biggest companies as well as smaller ones that are struggling for survival.
"While other categories are facing a contraction in valuations and raising capital, generative AI companies are not," said Shernaz Daver of California-based Khosla Ventures.
Hu said that the market valuations for generative AI companies have been sky high, while they have contracted for everything else.
OpenAI, the ChatGPT creator, is valued by Microsoft at nearly $30 billion despite still burning through money at a high speed, he said.
Entrepreneurs specializing in generative AI say they no longer need to scream out for attention when hunting for cash or walk through the details of what they are trying to offer.
"It's helped us a lot," said Sarah Nagy, founder of Seek AI, a start-up that allows nonspecialists to extract technical data from a database using queries in everyday language.
"The demand from customers has increased a lot," said Nagy. "It's even hard to keep up, because we're still a small company."
"The trend is to downsize, but we are currently hiring" in generative AI, said Daver.
In the last few weeks, it is mainly the giants that have been in the news, first and foremost Microsoft, OpenAI's partner and investor, followed by Google, which is trying to keep up.
But in their shadow, a galaxy of start-ups have ideas on offer too.
Other recent examples of funding rounds include California-based Kognitos, which aims to automate administrative tasks, and the platform for designers Poly that can whip out 3D graphics or maps in seconds.
In addition to the usual venture capitalists, tech giants are on the lookout, like Google, which just invested $300 million to acquire 10 percent of newcomer Anthropic and its chatbot Claude.
Hu said the ChatGPT "gold rush" could be unprecedented and expand well beyond Generative AI because the very technology itself minimizes the need for a computer coder or designer to execute ideas.
"Now you no longer need to get a Stanford PhD in computer science: any developer can build something amazing on top of ChatGPT and other foundation models in one weekend."
"This wave of AI could be bigger than mobile or the cloud, and more on the scale of something like the Industrial Revolution that changed the course of human history," Hu said.
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