Technology investment has entered a new frontier. Not so long ago, the landscape was punctuated by million-dollar rounds. Now, billion-dollar deals are becoming the norm. Fuelled by groundbreaking advances in deep tech, the quest for gargantuan levels of funding offers significant returns for those at the top, but what does it mean for the rest of us? And does it all boil down to business growth, or do these mega-investments signal a more serious shift in the power structures of tech, economics and geopolitics?
If high-profile examples like Microsoft’s push into AI and Google’s investment in autonomous cars are anything to go by, we can be confident that we are entering a new period of unprecedented opportunities. But with this potential comes risks, too – and the stakes are higher than ever.
Let’s explore why and what this might mean for the future.
Why companies are betting billions on tech
Businesses today face unprecedented pressure to embrace the latest technologies to stay competitive. Rapid digital transformation, combined with the disruption of old legacy systems, has created an ecosystem that rewards innovation and the ability to adapt, fast.
Deep tech – that dynamic and ever-evolving sector spanning AI, space, energy, biology, robotics, and more – is driving change at pace. But constantly pushing the boundaries of what is possible requires time, talent, and substantial financial backing.
As new and novel technologies evolve, they are fuelling unprecedented levels of investment and reshaping how capital is utilised, particularly across angel investing, venture capital and private equity. Major players like Microsoft, Google, Amazon and Apple are looking far beyond the short-term profits – they’re playing a long game, and they’re willing to pay for it.
Take Microsoft’s USD 10bn investment in OpenAI in 2023. Betting on ChatGPT won’t just enable Microsoft to benefit from the latest technological advancement, it has the power to secure its competitive edge in a fast-moving market, potentially outmanoeuvring Google in the search engine game. Meanwhile, Google has invested over USD 5.6 billion in its Waymo self-driving technology and is clearly committed to leading the charge in the autonomous driving race. Amazon continues to pour money into cloud computing to maintain its leadership in e-commerce and cloud infrastructure.
Investing isn’t just about driving the bottom line anymore, it’s also about staying relevant and securing a position at the front of the pack.
The double-edged sword of mega-investments
So, higher costs associated with developing sophisticated technologies are leading to higher investments, and those higher investments are speeding up the roll-out of some of the world’s most innovative technologies and creating ecosystems where multiple industries can collaborate and disrupt together.
2024 saw an unprecedented surge in mega-funding rounds for AI startups; AlphSense AI-driven market intelligence platform raised USD 650mn in June, while Safe Superintelligence Inc. raised USD 1bn in September. Quantum computing investments are revolutionising industries from cryptography to drug discovery. Companies like Fusion Ventures have secured over USD 2bn to accelerate developments in sustainable fusion energy solutions and space exploration, Blue Origin and SpaceX have raised billions to bring us closer to a new era of space economy.
But, these mega-investments are also creating higher barriers to entry for new players. We are now living in a world where the best-funded ventures win, and when substantial capital is involved, only the best-funded companies can compete at the highest levels. This creates a cycle where smaller firms struggle to secure funding to build the infrastructure and talent required to innovate and scale.
These smaller firms either get sidelined or hoovered up by larger players as part of an acquisition. This risks power becoming increasingly consolidated in the hands of a few incredibly powerful companies like Microsoft, Google, Amazon, Apple and Meta, who inevitably benefit from the best infrastructure, resources and talent.
Global tech wars and the race for dominance
These mammoth investments have wider implications too. True, technology has always been a national security asset, from rocket technology and intercontinental ballistic missiles to nuclear warfare and surveillance technology. But as governments become increasingly involved in large-scale tech investments, big tech is becoming a more strategic asset.
This is currently playing out in an intense competition between the U.S. and China over Artificial intelligence. Both nations have implemented policies to foster innovation and made substantial commitments to RI&D. While China has adopted a state-driven model involving heavy government support and a national strategy to become the world leader in AI by 2030, the U.S. government has ramped up AI funding and private sector innovation.
As governments become more involved in policies, regulations, and direct funding, big tech has the power to drive global alliances and rivalries, and national security is increasingly being defined by those who control the most advanced technologies.
Too much power? The darker side of mega-investments
The surge in mega-investments and concentration among so few tech firms has significant implications for market dynamics, too. It stifles competition, limits consumer choices and encourages a more monopolistic practice. Many academics now argue that as these companies expand their reach, they are more likely to influence policy decisions and could potentially undermine democratic processes.
Away from the geopolitical stage, experts are beginning to question the sustainability of this level of investment and sources like Vanguard are quick to highlight that mega-investments are driving market volatility. The rapid pace of technological advancement and the high costs associated with cutting-edge technologies can strain resources, particularly when those expected returns don’t materialise.
Others argue that short-term financial gains made by major tech firms can even overshadow long-term societal benefits, potentially hindering, rather than driving, development.
The future of investment
As we usher in this new era of investment, we need to acknowledge the opportunities and the challenges that lie ahead. The possibilities for innovation and technological advancement are immense, but if the financial ecosystem is propped up only by those who can bankroll these mega-investments, emerging innovators may struggle to keep pace. And, as governments and major corporations increasingly get involved and consolidate power, mega-investment rounds in cutting-edge technology is becoming an integral part of global strategy. With billions at stake, every investment is a bet on the future that nobody wants to miss out on.
