VALUING AI COMPANIES

Worldwide – Virtually

April 9, 2025

Introduction

Trillions of dollars are being invested in AI companies. But no one seems to have any idea how to value the AI companies they are investing in. Even AI offers no guidance for self-referential valuation parameters. That doesn’t compute.

Fortunately, Davos in the Desert is standing up and running a program to provide ideas and discussion relative to valuing AI. No one else is running a program even remotely similar or important.

Don’t miss this unique opportunity to gain insight into approaching one of the seminal questions of the day: What are AI companies worth?

Size of the Artificial Intelligence Industry

Trying to estimate the size of the AI industry risks missing AI’s bigger impact. AI is rapidly becoming embedded in many industries and in many aspects of our daily lives. AI is changing the way we consume news and schedule our daily affairs. AI is making logistics more efficient and enabling citizens to better navigate medical and government bureaucracies. AI optimizes the amount of water each plant receives and helps radiologists better read bone scans.

AI is a massive economic driver and a ferocious threat to large swaths of the white-collar community. Even back in 2022, 35% of companies used AI, while another 42% were exploring it. As a result, 24% of workers fear AI will render their jobs obsolete soon.

The global AI market is experiencing rapid growth. In 2024, the AI market was estimated to be between $196.6 billion and $233.5 billion. Forecasts call for the AI market to reach somewhere between $1.3 trillion to $1.8 trillion by 2030.

Considerations When Valuing AI Companies

If he was now with us, Winston Churchill might say that valuing AI companies is a riddle: wrapped in a mystery; inside an enigma. David Wanetick, CEO of Davos in the Desert, says that valuing AI companies isn’t rocket science. It’s much more difficult than that.

The following are among the considerations and methodologies that could be called upon when valuing AI companies:

Inference vs. Distillation	Legal Straightjackets
Open-Source v. Closed Loop	FOMO
First Chicago Valuation Method	Impact of Export Restrictions
Las Vegas Conundrum	Rules Based Industries
Rule of 40	Binomial Lattices
Javens Paradox	Mixture of Experts
Product Proliferation	Cash Burn
Competition from Customers	Icarus Paradox
Liability for AI Misfiring	Acqui-hires
Vesting Schedules and Cliffs	Bigger Fool Fallacy
Cost of Computing	Fermi Method

What Impact Will DeepSeek Have on AI Valuations?

The release of DeepSeek caused a $1 trillion bloodbath in U.S. equity markets. Was the January 20 launch coincidental with President Trump’s inauguration? Or does the debut represent a geopolitical shot across the bow?

Is DeepSeek really as good at answering questions and reasoning as ChatGPT, Gemini and Claude? Whatever the case, DeepSeek is causing the AI ecosystem to contemplate issues such as:

● Did it really cost $5.6 million only to develop DeepSeek?

● Did DeepSeek receive support from the Chinese government?

● Did DeekSeek really only rely on inexperienced programmers to create its AI?

● How did DeepSeek design around (or work around) advanced chip export restrictions?

● What will be the impact of DeepSeek on data center build out?

● What other AI breakthroughs might come out of the woodwork?

Money Movements in the AI Industry

There is a tsunami of money flowing into the AI industry. Below are a few of the deals that recently transpired (or were expected to take place):

● OpenAI has been in discussions to raise up to $40 billion, potentially valuing the company at $300 billion.

● Databricks raised $10 billion at a $62 billion valuation.

● Anthropic entered into advanced discussions to raise $2 billion, potentially pushing its valuation to $60 billion.

● Perplexity AI closed a $500 million funding round, increasing its valuation to $9 billion.

● Google agreed to a $2 billion licensing fee for Character.AI’s technology.

● Amazon agreed to pay $330 million to license Adept AI’s technology.

● Microsoft paid around $650 million to license Inflection’s technology.

Learning from the Presenting Companies

A few select AI companies will be invited to make elevator pitches. These CEOs are likely to discuss their firms’ addressable markets, AI architecture, engineering/programming talent, go-to-market strategy, electricity costs, capital raising record; collaborations and more.

What Will You Learn About the Presenting Companies?

The presenting management teams will discuss how their companies are positioned to detect deepfakes. They will apprise listeners of their unique product offerings, key selling points and their targeted customer segments. They will inform us of their research and development efforts, proprietary technologies, trade secrets and patent portfolios. They will tell us about their business models including the extent of their collaborations, marketing strategies, distribution channels, expansion efforts, customer acquisition strategies, milestones and exit strategies.

Agenda

Note: All Times Pacific

7:25 am – Welcome

7:30 am – AI Valuation Multiples – Drivers and Trends

This session will provide a thorough overview of recent trends in funding AI companies. You will learn about the numbers of AI companies receiving funding at various rounds in recent years. You will gain insight into the check sizes and valuations of such funding rounds. You will get a review of which investors have been most active in the AI space. The implied multiples resulting from such funding will also be discussed. Thoughts about AI valuations will be shared regarding important issues such as DeepSeek, investor expectations for portfolio companies to become cash flow positive and the costs of testing datasets.

Speaker: Shaheer Ansari, Analyst, Aventis Advisors

8:15 am – Elevator Pitches

8:30 am – AI Scaling Laws

Learn how to project inference training times and AI release dates based on issues such as the speed with which chips can be acquired and installed as well as the chip years deployed. Gain insight into how Open AI affects the diffusion of AI models and algorithms. Gauge the impact that DeepSeek may have on AI deployments and business models. Unique insight will also be shared with respect to AI moats and Jevon’s Paradox.

Speaker: Brian Wang, Futurist Thought Leader, Nextbigthing.com

9:30 am – Coffee Break

9:45 am – What Venture Capitals Seek When Investing in AI Companies

Learn what drives venture capital investment in emerging AI companies. Which verticals are most attractive to VCs? How is the quality of the talent assessed? How important is access to inexpensive electricity? To what extent does addressable market size excite VCs? What deal structuring techniques do VCs use to keep management teams focused? How can VCs make rational investment decisions in view of fierce competition for deals?

Panelists: Steven Bernardez, Partner, Pegasus Tech Ventures

10:45 am – Elevator Pitches

11:00 am – The Impact of Corporate Law on the Diffusion of AI

What kinds of sweeteners are offered during highly valued capital raises? Which side offers which sweeteners? What kinds of milestone provisions do AI companies confront when negotiating term sheets? How can AI companies shield themselves from liability arising from AI misfiring? How should acqui-hires be structured? What are some of the unique laws and regulations that AI companies must comply with? How should vesting of employee stock options be structured at AI companies? Are liquidity bonuses a better incentivization tool?

Speaker: TBA

11:45 am – Elevator Pitches

12:00 pm – Lunch

12:45 pm – The Intersection of AI and Intellectual Property Law

To what extent is AI code patentable? Which obviousness challenges do AI patent applications face? Is it better to retain key AI code as trade secrets? What role should AI play in preparing freedom to operate opinions? How can AI assist in drafting patents for congruency with relevant regulations and standards? Can AI-generated inventions be patented? What kind of remedies could be imposed on AI companies that violate copyright-protected materials? Where is the boundary between AI infringement and fair use? Which challenges arise when seeking to license AI code? What complexities does open-source pose to monetizing AI?

Speaker: Kevin Buckley, J.D., Founder & Senior US Patent Attorney, Torrey Pines Law Group

1:30 pm – Elevator Pitches

1:45 pm – The Impact of Employment Law on the Diffusion of AI

What steps should employers take to ensure that AI doesn’t result in substantially lower selection rates for protected groups of people? To what extent do labor laws and union agreements increase the difficulty of terminating employees made redundant by AI? What are the risks of AI violating employee privacy rights?

Speaker: TBA

2:30 pm – Elevator Pitches

2:45 pm – Valuation of AI Companies

The following are among the considerations and methodologies for valuing AI companies that may be discussed:

Inference vs. Distillation	Legal Straightjackets
Open-Source v. Closed Loop	FOMO
First Chicago Valuation Method	Impact of Export Restrictions
Las Vegas Conundrum	Rules Based Industries
Rule of 40	Binomial Lattices
Javens Paradox	Mixture of Experts
Product Proliferation	Cash Burn
Competition from Customers	Icarus Paradox
Liability for AI Misfiring	Acqui-hires
Vesting Schedules and Cliffs	Bigger Fool Fallacy
Cost of Computing	Fermi Method

Speaker: David Wanetick, CEO, Certified Patent Valuation Analyst and Managing Director at Merit Investment Bank

Please check back for updates to our agenda. If you would like to nominate a subject matter expert to speak or a CEO to deliver a company elevator pitch, please contact David Wanetick at dwanetick@davosinthedesert.us.

Registration

Registration is free for members of Davos in the Desert (annual members only), Certified Patent Valuation Analysts in good standing, and professionals who have purchased The Strategic Negotiator: A Manual for Negotiating at the Elite Level (see below right). Half of our capacity is reserved for these professionals.

The early-bird registration price for non-members is just $45. Registration is for one attendee. No passing on of registration links. (That results in automatic expulsion from online programs.) No refunds.

Need help registering? Send an email to Neomi Barazani at neomi@davosinthedesert.us.

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