The explosion of artificial intelligence is rapidly surpassing all previous wealth creation fads. Many of today’s private AI fortunes will eventually become more liquid with time and initial public offerings (IPOs), offering wealth management companies a once-in-a-lifetime chance.
Anthropic, Safe Superintelligence, OpenAI, Anysphere, and more firms have made huge new paper riches and driven valuations to all-time highs thanks to their successful funding rounds this year.
According to CB Insights, there are already 498 AI “unicorns,” or private AI businesses valued at $1 billion or more, with a total worth of $2.7 trillion. Since 2023, a total of 100 of them have been established. According to the business, there are over 1,300 AI startups valued at over $100 million.
AI is generating personal wealth on a scale that makes the previous two tech waves seem like warmups. This is in addition to the skyrocketing stock prices of publicly traded AI-related companies like Nvidia, Meta, and Microsoft, as well as the infrastructure companies that are constructing data centers and processing power and the enormous salaries for AI engineers.
“Going back over 100 years of data, we have never seen wealth created at this size and speed,” said Andrew McAfee, principal researcher at MIT. “It’s unprecedented.”
A new generation of billionaires is emerging, their valuations soaring. At least 15 billionaires with a combined net value of $38 billion were produced by four of the biggest private AI startups, according to a March Bloomberg estimate. Since then, almost a dozen unicorns have been crowned.
Thinking Machines Lab was founded in February by Mira Murati, who departed Open AI in September of last year. According to estimates, by July, she had secured $2 billion in the biggest seed round ever, valuing the company at $12 billion.
At a valuation of $170 billion, almost three times its March valuation, Anthropic AI is in negotiations to raise $5 billion. According to those familiar with the company, CEO Dario Amodei and the other six founders are now probably multibillionaires.
In a June fundraising round, Anysphere was valued at $9.9 billion. A few weeks later, it was reportedly offered a price of $18 billion to $20 billion, which would have made its CEO and creator, Michael Truell, 25, a billionaire.
Granted, the majority of AI wealth creation occurs in private businesses, making it challenging for founders and stock holders to pay out. Today’s AI startups can remain private for longer because to ongoing investment from venture capital funds, sovereign wealth funds, family offices, and other tech investors, unlike the dot-com boom of the late 1990s when a plethora of businesses went public.
At the same time, private company equity owners are able to sell their shares to other investors and offer liquidity thanks to the secondary markets’ explosive rise. Tender offers and structured secondary sales are becoming more common. A lot of founders have the ability to borrow money using their stock.
Open AI is holding talks for a secondary share sale to provide cash to employees. Its proposed valuation of $500 billion follows the company’s fundraise in March that provided a $300 billion valuation.
Liquidity is also being provided by the acquisition or merger of dozens of private companies. Alexandr Wang, the creator of Scale AI, joined Meta’s AI team after the company invested $14.3 billion in it. According to CB Insights, since 2023, there have been 73 liquidity events, such as corporate majority stakes, IPOs, reverse mergers, and mergers and acquisitions. Lucy Guo, a co-founder of Scale AI who departed the company in 2018, spent over $30 million on a mansion in the Hollywood Hills of Los Angeles after the Meta deal.
According to New World Wealth and Henley & Partners, San Francisco currently boasts 82 billionaires, more than New York, which has just 66. Over the last ten years, the number of millionaires in the Bay Area has doubled, while New York has seen a 45% increase.
According to Sotheby’s International Realty, more properties in San Francisco sold for more than $20 million last year than in any previous year. AI is largely responsible for the city’s rising rents, property prices, and demand, which represents a dramatic change from a few years ago when the city was in a “doom loop.”
Today’s AI entrepreneurs are likely to follow the same path, with huge potential for AI to disrupt — if not replace — many of the traditional functions of wealth management.
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