Funding for AI-driven media startups remains strong despite VC investment decline in 2023
Funding for startups has become scarcer as venture dollars dwindled in 2023 amid a slowing economy and layoffs in tech. But as with so many sectors, founders in entertainment who are looking for funding are still able to raise it — especially when AI is part of the deal.
Michael Blank, who leads Creative Artists Agency’s investing arm Connect Ventures, told Business Insider that investors’ interest in blockchain- and web3-specific companies has cooled. But companies with gen AI at their core — tech that has disrupted special effects and translation — are still red-hot, with new ones popping up all the time.
“After a period of ‘wild west’ investing in AI, Blank believes activity will favor AI companies that respect artists’ consent and compensation. Such issues were among the top concerns of striking Hollywood actors and writers in 2023 — and both guilds won concessions protecting their creative work from the incursion of AI in their new contracts with the Hollywood studios.
“It’s more important than ever to work with companies that ensure people have control over their IP. There are more folks now than ever that agree with that approach,” Blank said.
Veteran media investor Jon Miller said AI can help reduce the cost of Hollywood’s highly expensive content, even factoring in the guilds’ restrictions. He also sees the tech being used more to increase efficiency and accuracy in customer acquisition and content valuation.
AI can provide “genuine benefits to workflow,” said Miller, CEO of TPG investment vehicle Integrated Media Co. and a senior advisor at Advancit Capital. “The budgets of these shows are extraordinarily high, so if you can take out some meaningful costs, you’ll want to do that,” he continued, adding, “The second area is that the value of investing in programming will be more defined.”
Investors place their bets on AI to reduce the high costs of Hollywood productions
Investors in the entertainment industry are increasingly turning to AI-driven startups to cut the high costs of Hollywood productions. With the budgets of shows reaching extraordinary heights, AI technology presents an opportunity to streamline workflows and make productions more efficient.
AI tools that support content creation and consumption are now highly attractive in the industry. This includes areas such as production, visual effects, and localization, where companies are being built to address these spaces. By leveraging AI, companies can reduce costs and improve the overall value of their investments in programming.
Jon Miller, a veteran media investor, believes that by utilizing AI, the high costs of Hollywood productions can be significantly reduced, even with the restrictions imposed by the guilds. The technology can bring genuine benefits to workflow, leading to more efficient and accurate customer acquisition and content valuation.
Investors are recognizing the potential of AI to transform the entertainment industry. They understand that by investing in AI-driven startups, they can not only reduce costs but also improve the overall output and value of the content being produced.
16 VCs identified by Business Insider that are capitalizing on AI and industry shifts
Business Insider has identified 16 venture capital firms that are capitalizing on the use of AI and other industry shifts in the entertainment sector. These VCs are investing in startups that are leveraging AI to disrupt the filmed entertainment industry and other related areas.
The identified VCs include talent agencies like Creative Artists Agency (CAA), which has long used investment arms to diversify its revenue beyond representation and support its clients’ business ambitions. Other VCs such as Bertelsmann Digital Media Investments and Elysian Park Ventures have also been actively investing in startups that support their parent companies’ business units.
Firms like Octopus Ventures and Waverley Capital have been focusing on AI startups with entertainment applications. They are backing companies that are using AI to lower the cost of translating film and TV content, streamline production workflows, and personalize content through AI.
These VCs are recognizing the potential of AI to disrupt the entertainment industry and are actively seeking opportunities to invest in startups that are leveraging AI to drive innovation and improve efficiency in the sector.
AI startups find funding opportunities in the entertainment industry amidst dwindling venture dollars
While overall venture capital investment has declined in 2023, AI-driven media startups continue to find funding opportunities in the entertainment industry. Investors are attracted to startups that leverage AI to disrupt various aspects of the entertainment sector, including special effects, translation, and content production.
Founders in the entertainment industry who are incorporating AI into their startups are able to attract investment, despite the challenging funding landscape. The potential for AI to reduce costs and improve efficiency in the highly expensive Hollywood productions is a compelling proposition for investors.
Investors are keen to support companies that respect artists’ consent and compensation. This has become an important consideration, as artists and writers in Hollywood have raised concerns about the impact of AI on their creative work. Startups that prioritize artists’ control over their intellectual property are particularly attractive to investors.
Overall, the entertainment industry continues to provide opportunities for AI-driven startups, and investors are eager to back companies that are leveraging AI to disrupt traditional processes and improve the efficiency and value of content production.
Analyzing the 16 VCs backing AI startups in the entertainment sector
Business Insider has identified 16 venture capital firms that are actively investing in AI startups in the entertainment sector. These VCs are capitalizing on the potential of AI to disrupt various aspects of the entertainment industry, including content creation, localization, and production.
The identified VCs include well-established firms such as Accel, which has invested in over 300 companies and has a keen interest in AI applications. Aperture Venture Capital, on the other hand, focuses on the intersection of fintech and AI with entertainment, seeking opportunities to streamline production finance operations in the entertainment industry.
Bertelsmann Digital Media Investments, a longstanding corporate venture arm, invests in tools that streamline production. Connect Ventures, a partnership between talent giant CAA and New Enterprises Associates, invests in early-stage media and commerce companies.
Other VCs identified by Business Insider include Elysian Park Ventures, Endeavor Venture Investments, Fiat Ventures, Javelin Venture Partners, LightShed Ventures, Octopus Ventures, Point72 Ventures, Powerhouse Capital, Raine VC, SWaN & Legend, UTA.VC, and Waverley Capital. Each of these VCs brings its own expertise and focus within the entertainment industry.
These VCs play a crucial role in supporting the growth and development of AI-driven startups in the entertainment sector. Their investments provide startups with the necessary capital and resources to innovate and disrupt traditional processes in the industry.
Analyst comment
Positive news: Funding for AI-driven media startups remains strong despite VC investment decline in 2023.
Market analysis: The market for AI-driven media startups in the entertainment industry is expected to remain robust, as investors recognize the potential of AI to reduce costs, improve efficiency, and disrupt traditional processes. Startups that prioritize artists’ consent and compensation are particularly attractive to investors. Overall, the market is poised for continued growth and innovation in the coming years.
