Palo Alto – February 18, 2025 – About half of the 120 clients Woodside Capital Partners has advised in the past five years have been AI-enabled – acquisitions of AI-related companies are booming in 2025. We were excited to participate in the Human[X] Conference last week at the Fontainebleau Hotel in Las Vegas – a monumental, 3-day, AI-focused gathering with 3,000+ attendees, 350+ speakers, and 150 sponsoring companies. Looking for guidance on maximizing outcomes in the acquisition of your AI-enabled company? Please reach out – before joining WCP, our 20 team members were former heads of strategy, corp dev execs, CEOs, and career investment bankers. We know our industries and what it takes to optimize M&A outcomes for tech companies. 

Following are ten takeaways from the conference:

1. Continued hype, celebration & concern about the future of AI

Accelerating intelligence and independence of machines continue the expectation of unprecedented glory and potentially unprecedented doom to humanity and the planet. As seen and heard in presentations and conversations:

“AI will be more significant than fire or electricity.”
“AI will solve all of humanity’s grand challenges, from disease to poverty.”
“AI will lead to an age of abundance, making goods and services nearly free.”
“AI will eliminate 90% of jobs and lead to mass unemployment.”
“Superintelligent AI will enslave humanity.”
“AI could lead to human extinction.”

– Sundar Pichai, Marc Andreesen, Sam Altman, Ben Goertzel, Nick Bostrom, and Geoffrey Hinton respectively

2. The pace of change in AI continues to accelerate

AI is evolving at an exponential pace, with computational power doubling approximately every six months, not every two years as originally predicted by Moore’s Law. Statista forecasts a compound annual growth rate for AI-related economic output of 17.3% from 2023 to 2030, reaching $740 billion. The exponential growth is built on fast advances in hardware, large language models, automation, widespread adoption, and regulatory frameworks, with innovations like self-improving agents and multimodal AI accelerating progress toward potential AGI – some say within the next decade.

3. Global venture funding in AI continues to surge

One third of global venture funding is being directed to AI companies. Conference-goers heard comparisons to the early decades of the car industry — specifically that 1,900 different automotive companies eventually consolidated to fewer than 20. Global AI startup funding was $103 billion in 2024, an 84% increase from $56 billion in 2023, making AI the top sector for venture capital.

4. M&A of AI-related companies is booming – and 2025 is on pace to far over-deliver each of 2022-2024

During the past three years, the number of M&A exits in AI has been brisk – averaging about 600 exits per year. If the YTD trend for early 2025 continues, there will be 800+ exits this year:

Of the 821 M&A deals since January of 2024, 55 have returned more than $100 million to shareholders.

Of the 65,000 companies in Pitchbook’s database that identify as AI companies, Pitchbook’s “VC Exit Predictor” algorithm projects that 8,700 have a 50% or better likelihood to exit via IPO or M&A.

5. Three-quarters of CEOs say they’ll lose their job within two years if they don’t deliver measurable AI business gains

here was plenty of discussion at the conference about a just-released worldwide study of 500 CEOs by the predictive modelling company Dataiku – key headline is that three-quarters of CEOs say they will lose their jobs within two years if they don’t deliver measurable AI business gains demanded by their boards. Meanwhile, 80%-90% of companies are struggling to get AI out of proof-of-concept and into production. Key gating factors to production continue to include data quality, privacy concerns, compatibility with legacy systems, shortage of AI talent, model scalability and reliability in real-world conditions, regulatory compliance, organizational resistance, high costs of infrastructure and ongoing maintenance.

6. Explosive growth of AI solutions for the enterprise

Despite the gating factors described above, dozens of AI solutions are growing across multiple areas of enterprise – particularly in marketing & sales, finance, and in the CIO suite. In customer service, AI-powered chatbots and virtual assistants handle inquiries and automate support and make mass personalized recommendations. Cool companies: Decagon, Moveworks, Sanas. In finance, AI automates repetitive tasks, particularly in accounting, and analyzes vast datasets for fraud detection and risk assessment. Cool companies: Feedzai, ThetaRay, Fintool, Puzzle.io, JustPaid. For CIOs, AI is improving management of IT and data. In software development, AI is transforming with code generation and cybersecurity solutions, making businesses more agile and data-driven. Cool companies: MindsDB, TaraAI, Zetaris. Significant growth lies ahead.

7. Among the most impressive and advanced enterprise AI tools – solutions for marketing

Thanks to AI tools, it takes only 20 minutes to create a brand that would have previously taken months – from strategy, to business plan, to creative, to ad buys. Cool company: Synthesia – which currently works with 60 of the Fortune 100 – has revolutionized video creation with high quality AI-generated avatars that speak 120 different languages. AI solutions are dominating ad creation, video creation, and ad planning and buying. In addition to content creation, marketing executives at the conference talked about the opportunity of unprecedented personalization at scale, enhanced efficiency and cost reduction, real-time decision making and predictive analytics.

8. The remarkable AI revolution in mental health

AI tools are aiming to address and influence the mental health crisis. In a fireside chat, Vinod Khosla of Khosla Ventures pointed out that most mental health issues are triggered late at night … you can call a therapy provider the next morning but you may not get an appointment for several weeks, when the crisis has passed. Enter well-trained therapy chatbots. The vision is that in five years the mental health industry will not be limited by the number of humans and instead will be able to grow significantly because of the availability of AI. Cool companies: Woebot Health, Wysa (cognitive behavioral therapy via chatbot), and Limbic (AI agent assisting with mental health service – 400,000 patients served).

9. “Living Intelligence” and “Agentic AI” are everywhere

A prominent theme at the conference was the concept of ‘Living Intelligence,’ which represents the convergence of artificial intelligence, biotechnology, and advanced sensors. This integration aims to create systems capable of sensing, learning, adapting, and evolving, thereby blurring the lines between biological and artificial systems. Cool companies – xAi: advanced AI models capable of reasoning and real-world adaptation; Anthropic: developer of Claude and AI systems that can be reliably integrated into real-world applications like personalized assistants and adaptive learning environments; Sanctuary AI – building AI-powered robots designed to perform complex physical tasks.

Agentic AI systems are autonomous and goal-directed, making decisions and taking actions with minimal human intervention and going beyond traditional machine learning models by proactively reasoning, planning, and adapting to complex environments. Agentic AI is a major trend in Living Intelligence (see next). Cool companies: OptimHire – AI recruiter automates tasks like candidate sourcing and interview scheduling to significantly reduce hiring timelines and costs. The company facilitated 8,000 hires in 2024. Zoom – has rebranded as AI-first, rolling out an AI companion that helps users summarize meeting tasks, draft email responses, and better prepare for meetings.

10. Trustworthy output from LLMs continues to be a key area needing improvement

In the enterprise in particular, AI solutions need to produce reliable outcomes with 99.99999% accuracy. Yet AI “hallucinations” in the form of incorrect predictions, false positives and false negatives remain a fundamental problem. Architects are working on addressing hallucinations via improved model architectures, retrieval-augmented generations, multi-agent verification and more. Because of the less-than-perfect reliability, many large enterprises are using AI solutions on the relative periphery of their businesses (this despite the aforementioned explosive growth of AI solutions). One C-suite exec at a Fortune-100 company said “As a leader in an environment using AI, you have to be the author of meaning of the data. You need to have a clear vision of what you want. It will be a leadership requirement like no other.”

Utopia or Dystopia for Workers?

An overriding key question asked at the conference – Does AI make people smarter, or does it make them easier to replace? The most common answer was “both”. Those who learn to integrate AI into their work will enhance their productivity, creativity, and decision-making, making them indispensable. But jobs that rely on repetitive tasks and pattern recognition without human judgment or creativity will be at risk. The key distinction is adaptation: AI won’t replace humans outright, but humans who effectively use AI will replace those who don’t. The future of work will favor those who can collaborate with AI rather than compete against it.

Similarly – is AI truly creative or is it simply intelligent? Humans create from the bottom up; AI creates from the top down, based on whatever someone puts into a prompt. Humans create out of their unique and layered experiences of the world which often cannot be put into words, like AI requires. While concern abounds about humans being replaced or dominated by AI, debate ensues about whether human creativity can be replaced by AI in the near future, or ever.