Even relatively junior engineers at the leading research companies that are developing AI foundation models, including OpenAI, DeepMind and Anthropic, can command seven-figure salaries and are bombarded with job offers whenever they log on to LinkedIn. More senior engineers can earn up to $10m.

“There is no question that there is an enormous talent war,” says Jordan Jacobs, managing partner of Toronto-based Radical Ventures, which has invested in some 50 AI start-ups globally. “At the top of the pyramid are the people who can build foundation models and make them sing. There are very few people who can do that effectively and there are organisations that will pay them an absolute fortune to do so.”

But it is also a further sign that the emerging AI economy will probably be dominated by the US tech giants with the money, human capital and cloud computing infrastructure needed to train state of the art foundation models, such as OpenAI’s GPT-4 and Google’s Gemini.

To better compete for artificial intelligence researchers, Meta Platforms is making unconventional moves, including extending job offers to candidates without interviewing them and relaxing a longstanding practice of not increasing compensation for employees threatening to leave.

In a sign of how seriously the social media company is taking the competition for AI talent, CEO Mark Zuckerberg has personally written to researchers at Google’s DeepMind unit to recruit them.

Meta still faces hurdles in hiring and keeping highly coveted AI researchers, including that its pay packages often aren’t as rich as those at DeepMind and OpenAI. Meta’s top AI researchers, particularly those hired into senior roles from outside the company, earn total annual compensation of around $1 million to $2 million, three former employees said. Meanwhile, OpenAI recruiters told some Google AI researchers last fall that their annual compensation, mostly in the form of stock, would range from $5 million to $10 million after OpenAI completed a then-pending share sale. And DeepMind has given some researchers large grants of restricted stock worth millions of dollars.

Some key researchers have left over the past year. At least 10 of the 68 authors of Meta’s July 2023 paper describing Llama 2, the latest version of its flagship LLM, no longer work at the company, according to people who worked with them and their LinkedIn profiles; and at least seven of the 14 authors of Meta’s paper about the original Llama model, published in February 2023, have also departed.

KEY TAKEAWAYS

1) Big tech continues to pile in on AI infrastructure, nabbing stakes in the next generation of AI startups.

As companies rush to harness AI’s potential, big tech wants to put itself right at the heart of AI value chains.

Some of the largest AI rounds backed by the group in 2023 went to leading foundation models and other development platforms: OpenAI ($10B corporate minority from Microsoft), Anthropic ($2.6B in funding over multiple rounds backed by Google and Amazon), and Databricks ($500M Series I backed by Nvidia’s NVentures with follow-on participation from AWS and Microsoft).

2) Rivalries in cloud computing drive activity, while some startups bring in multiple big tech backers to remain neutral.

Due to the capital-intensive nature of AI development, startups are linking up with big tech companies like Google, Microsoft, Amazon, and Nvidia to access their cloud infrastructure, chips, and dollars.

In turn, big tech companies are fueling their rival cloud computing and chip businesses.

3) Healthcare and industrials lead big tech’s vertical AI investments.

Nvidia backed 8 AI startups in healthcare & life sciences in 2023, with 7 of these focusing on AI drug discovery, as the chipmaker doubles down on the sector.

Applications in materials development, manufacturing, and warehousing are also drawing the attention of big tech as the sector races to automate operations.

For example, the Amazon Industrial Innovation Fund invested in AI-powered robotics safety startup Veo Robotics in April 2023. Meanwhile, just last month, Microsoft’s M12 and NVentures backed humanoid robotics startup Figure’s $675M Series B.

4) An emerging focus area is AI companions and agents.

Companies in this category like Inflection are working to make interacting with computers as conversational as it is to talk to people.

A number of companies backed by big tech in 2023, like Adept and Imbue, are building “autonomous agents” — LLM-powered bots that can independently reason and execute tasks.

In this vein, in January 2024, the Amazon Alexa Fund backed a round to AI agent startup MultiOn.

5) Nvidia bursts onto the scene.

Overall, Nvidia has ramped up its activity more significantly — from backing 5 AI startups in 2022 to 32 in 2023 — than any other tech giant as it embeds itself deeper in the generative AI ecosystem.

Apple and Meta, which historically have made fewer investments compared with other giants and do not have venture arms, did not publicly disclose any AI startup investments in 2023.

LOOKING AHEAD

Large acquisitions have been key for big tech to bring in new revenue sources as well as launch new product lines.

But with regulatory pressure hobbling big tech’s acquisition activity, expect these players to lean more heavily on AI partnerships and investments, as well as product launches, in the coming months.