Venture capitalists are in the business of predicting the next big thing, even if they burn in the process. While everyone fell for crypto in 2021 – and many remain optimistic about the future despite multiple failures this year – 2022 saw the rise of generative AI.

But as is the case with any transformative new technology, hype is bound to come with growing adoption, and generative AI has garnered so much attention and money that many VCs already think the nascent industry will be the next bubble.

australiabusinessblog.com recently surveyed more than 35 investors across geographies, investment stages and industries about how they feel about next year. One of our questions was their prediction of where the next bubble would be, and nearly half of those surveyed mentioned generative AI.

While several investors said they were optimistic about the new technology in general, they also admitted that the industry was likely to get lost in its own hype.

Don Butler, managing director at Thomvest Ventures, feels the bubble is already there. “We believe the applicability of AI to so many use cases will lead to a very large number of startups being funded in the space, also at some eye-watering valuations, which is why we think the next big bubble is already expanding in this area,” he said.

This isn’t surprising given how the industry has been booming as consumer tools lately ChatGPTDALL-E and Lensa AI became extremely popular both within and outside the tech community.