AI Wealth Creation at a Record Speed

Artificial intelligence is creating wealth at an unprecedented speed and scale, giving rise to a new batch of billionaires.

According to CB Insights data, there are currently 498 AI "unicorn" companies worldwide with valuations exceeding $1 billion, totaling a value of $2.7 trillion, with 100 companies established in 2023 and beyond, and over 1,300 companies valued at over $100 million.

At the core of this wealth feast is the astonishing fundraising capability and skyrocketing valuations of AI startups. Anthropic is negotiating to raise $5 billion at a valuation of $170 billion, nearly doubling its valuation since March. Thinking Machines Lab, founded by former OpenAI CTO Mira Murati, completed a $2 billion seed round in July, setting the record for the largest seed round in history.

This round of wealth creation is not limited to startups; the soaring stock prices of publicly listed tech giants, including NVIDIA, Meta, and Microsoft, along with the booming development of infrastructure companies like data centers, collectively form the panorama of this AI wealth explosion.

Andrew McAfee, a principal researcher at MIT, stated:

“Looking back at data from the past 100 years, we have never seen such scale and speed of wealth creation; it is unprecedented.”

A Rapid Emergence of New Billionaires

This year's significant funding rounds are rapidly creating new billionaires. According to Bloomberg's estimates from March, the four largest private AI companies have created at least 15 billionaires, with a total net worth of $38 billion. Since then, more than a dozen unicorn companies have emerged.

According to media reports citing informed sources, Anthropic AI's CEO Dario Amodei and his six co-founders are now likely billionaires with net worths in the billions. Additionally, Anysphere was valued at $9.9 billion during its June funding round, and weeks later reportedly received valuation offers between $18 billion and $20 billion, which could make its 25-year-old founder and CEO Michael Truell a billionaire.

It is worth noting that most of the current AI wealth still exists in the form of "paper wealth" within unlisted companies, making it difficult for founders and equity holders to cash out immediately.

Unlike the late 1990s internet bubble, when many companies rushed to IPO, today's AI startups can remain private for longer periods due to ongoing investments from venture capital, sovereign wealth funds, family offices, and other tech investors.

Although IPO channels have narrowed, the new AI elites are not without ways to convert paper wealth into liquidity. The rapid development of the secondary market provides them with opportunities to sell equity, and structured secondary sales or tender offers are becoming increasingly common.

The ongoing secondary share sale negotiations at OpenAI are a typical example, aimed at providing cash for employees. Additionally, many founders can also borrow against their equity through equity pledges Mergers and acquisitions are another important liquidity event. According to CB Insights, since 2023, there have been 73 liquidity events in the AI sector, including mergers and acquisitions, IPOs, reverse mergers, or majority stake acquisitions.

For example, after Meta invested $14.3 billion in Scale AI, its founder Alexandr Wang joined Meta's AI team. Meanwhile, Scale AI's co-founder Lucy Guo, after leaving the company in 2018, used her equity wealth to spend about $30 million on a mansion in the Hollywood Hills of Los Angeles.

Wealth Creation Highly Concentrated in the Bay Area

This wave of AI enthusiasm is geographically concentrated in the San Francisco Bay Area, reminiscent of Silicon Valley during the internet era.

According to data from the Silicon Valley Institute for Regional Studies, last year, companies in Silicon Valley received over $35 billion in venture capital. Additionally, reports from New World Wealth and Henley & Partners indicate that the number of billionaires in San Francisco has now reached 82, surpassing New York's 66. Over the past decade, the population of millionaires in the Bay Area has doubled, while New York's increase was 45%.

The influx of wealth has directly boosted the local economy. According to Sotheby's International Realty data, the number of homes sold in San Francisco for over $20 million last year hit a record high. This city, which faced a "doom loop" just a few years ago, is now experiencing significant increases in rents, home prices, and demand due to AI-driven needs.

McAfee stated:

“The geographical concentration of this AI wave is astonishing. Those who know how to create, fund, and grow tech companies are all there. For 25 years, I've heard people say 'this is the end of Silicon Valley' or that some place is the 'new Silicon Valley,' but Silicon Valley is still Silicon Valley.”

Wealth Management Industry Faces New Opportunities and Challenges

As time goes on and potential IPOs loom, the enormous wealth created by these private AI companies will eventually become more liquid, presenting historic opportunities for the wealth management industry.

According to tech consultants, all major private banks, large brokerages, and boutique investment banks are actively reaching out to AI elites in hopes of winning their business.

However, serving this new elite is not an easy task. Simon Krinsky, Executive Managing Director at Pathstone, points out that most AI wealth remains locked in illiquid private company equity. He believes that the proportion of illiquidity in the wealth of new AI billionaires is much higher compared to employees who previously worked at large public companies like Meta or Google.

Krinsky expects that AI billionaires will follow a similar behavioral pattern to the internet billionaires of the 1990s: initially using excess liquidity to invest in similar tech companies they know through their networks, and after experiencing high volatility and concentrated risks in speculative industries, ultimately turning to professional wealth management services for diversification and professional protection