DeepMind exodus: VCs chase alumni building alternatives to LLMs

A group of 15 Google DeepMind employees and alumni met for breakfast at a five-star hotel in central London this month, and talk quickly turned to how to raise money for an AI startup. They traded tips on what Silicon Valley investors want to fund, Bloomberg reported on September 25.

For years, Alphabet's London research lab was a destination of choice for top AI researchers. The mood is changing as the company shifts the centre of its AI division from London to California, underlined by DeepMind co-founder Demis Hassabis stepping down from running Google's AI and research operations in August.

Why researchers are leaving

Hassabis handed day-to-day control of the lab to technology chief Koray Kavukcuoglu and became Alphabet's chief scientist. Veteran engineer Jeff Dean left the same day to start a Google-backed company, Gemini co-lead Noam Shazeer joined OpenAI, and Nobel laureate John Jumper moved to Anthropic.

Commercial pressure is another reason. "There's a top-down pressure to drop everything you're working on and focus on large language models. Then you just leave, there's no point," said Janusz Marecki, a former DeepMind lead scientist now at Ahren Innovation Capital. He says he regularly meets DeepMinders "who are looking for an exit".

The startups and the money

Nando de Freitas, who spent about a decade at DeepMind before a stint at Microsoft, is in talks to raise at least $100 million initially for Revolution Labs, which will focus on AI diffusion models, an alternative to the transformers behind large language models. Venture fund Accel is in talks to lead the round, Bloomberg reported. De Freitas did not respond to a request for comment.

He follows David Silver, who raised around $1 billion this year for Ineffable Intelligence, a startup developing a new AI learning system. Thore Graepel, who left this summer, is seeking substantial funds for reasoning-model startup Metis Reasoning, while Emulate, founded by a trio of former DeepMinders including Jack Parker-Holder, is in talks to raise $700 million for systems that simulate the real world.

Google and DeepMind have produced more than 40 founders of so-called neolabs, more than OpenAI, Anthropic and Meta combined, according to June analysis by Radical Ventures.

Investor frenzy, investor nerves

VCs are competing for these teams, and deal structures show it: rounds are split into tranches, with blue-chip investors arriving early at a lower valuation and later backers paying more. "Valuations used to be 10 times revenue," Marecki said. "Now it's 200 times, 300 times."

Aaron Rosenberg, a London partner at Radical Ventures who also worked at DeepMind, calls the exodus "bittersweet". Colin Murdoch, DeepMind's former chief business officer, joined the firm as an adviser this week. Hassabis has dismissed talk of a brain drain, saying the lab still "wins our fair share of the top talent".