This could be an extinction level event for some VCs.
Making a pure-research, foundation model company is silly. Make a product company that sells products.
Startups don't have that option.
1) Their initial AI offerings weren't real products customers would use or pay for
2) They weren't seeing sufficient adoption to justify the expense
3) They have insane levels of distribution in their existing product lines and can incrementally add AI features
This is entirely orthogonal to whether or not other startups can build AI-first products or whether they can position themselves to compete with the giants.
What moat does an AI startup have that will prevent them from being crushed by big tech?