Three years into the artificial intelligence (AI) mega-investment cycle, North American dealmaking remains dominated by venture-backed fundraising rounds as sky-high valuations and limited profitability deter buyers of pure-play AI companies. Some may balk at the multi-billion-dollar valuations for young and unprofitable startups, but Larry Chu, partner at Goodwin, said hiring the best AI talent off the street in ones and twos is almost impossible. “Think about the time value of acquiring a really talented team with dense, collective know-how to build and ship a product really, really fast – what’s that worth to you? The need for speed is driving a lot of M&A discussions,” Chu said. The classic buy-versus-build conversation may lean toward buy simply because the startups are innovating and iterating much faster than larger corporates can. “If you’re not thinking about every piece of the stack, then you’re not thinking about AI in the right way,” Chu said.
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