🔮 Zombie capitalists; China’s AI catchup; hallucinating drugs; India’s lithium++ #410
ChatGPT could be China’s “second Sputnik moment".
Hi, I’m Azeem Azhar. I convene Exponential View to help us understand how our societies and political economy are changing under the force of rapidly accelerating technologies.
In today’s edition:
How the relationship between governments and VCs is shifting,
ChatGPT could be China’s “second Sputnik moment”,
The high-tech arms race in the Ukraine war.
Sunday chart: Something ventured, not much gained

Venture capital has had a terrible year compared to other private assets. The risk-off trade has put paid to many a unicorn. But it may also have turned many VC firms into zombies: asset managers who need to manage an existing portfolio but will be unable to raise a future fund. Zombie firms can take up to a decade to wind down. (Quite often this creates a market for secondary transactions were the zombies offload their portfolios to specialist managers.)
Such a poor, volatile return, despite the solid 10-year performance, may also put off some of the limited partners who back such venture funds, in particular family offices. If the venture funders themselves face a funding gap, then the entrepreneurs they back will too.
Separately, the European Union has a new €3.75bn fund-of-funds facility to back existing VC firms. This may alleviate local pressure. Although, I think this initiative is misconceived as the goal appears to be to keep European firms European (which may also mean small).1 What drives firm success is customers and talent, not capital.
Key reads
Sputnik redux: In his 2018 “AI Superpowers” book, Kai-Fu Lee argued that when Deepmind’s AlphaGo mastered the ancient game, Chinese society experienced a “Sputnik moment”. The realisation that they were behind on AI would kickstart large strategic investment, and lead them to potentially winning the “AI race”. China may have just had its second Sputnik moment. Analyst Rui Ma shared that ChatGPT produced a shockwave across the Chinese tech ecosystem. Wang Huiwen, co-founder of Meituan, the $100bn e-commerce service, has already put $50m to seed a Chinese equivalent of OpenAI.
Catalytic capacities: We’re seeing a major shift in how the US economy is managed. Over the past two years, the Biden administration has passed the infrastructure law, the CHIPS and Science Act, and the Inflation Reduction Act. This is an experiment in the government directing the economy in highly strategic industries, with the hope of the US becoming a resilient, re-industrialised, high-tech decarbonised superpower. As I have argued in my 2023 horizon scan, this new form of governing — catalytic government — will require public sectors across the world to acquire new capacities, as they become more active in shaping future research and strategic industries.
Weekly commentary
I’ve been thinking and writing a great deal about chatbots, generative AI, and ChatGPT in particular. These four essays will give you a perspective on why all of this matters — and members of Exponential View can expect another layer of analysis in the next week.
On the generative wave
Market data
Twitter has 100.9m active users in Europe.
India has discovered 5.9 million tonnes of lithium, making it the 7th largest country by reserves. Political volatility in the discovery region could pose problems for extraction.
The average New Yorker has decreased their annual spending on meals and shopping near their workplace by $4661 due to remote work.
GitHub Copilot is behind an average of 46% of developers’ code.
24% of new crypto tokens that gained traction in 2022 looked like pump & dump schemes.
Short morsels to appear smart at dinner parties
🇮🇳 India is developing a ChatGPT-based Whatsapp chatbot to inform rural citizens about government schemes.
💊 Hallucinating drugs: AI startups are dreaming up entirely novel drugs. Will they work?
🧨 The UK secretly developed a series of high-tech drones to support Ukraine’s war effort, including a 3-D printed “suicide drone”. Meanwhile, Russian soldiers are experimenting with self-destructing, remote-controlled wheeled, and static gun towers.
👀 Reducing China’s agricultural emissions with an integrated system of biomass pyrolysis and electricity generation.
🤖 An amateur Go player has beaten a state-of-art AI Go player 14 games to 1.
🫀 The hardest pump to engineer: a deep dive into the complexity of creating an artificial heart.
Exponential knowledge community
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What you’re up to:
Murray Shanahan, a Professor at Imperial College and researcher at DeepMind, has updated his paper on the dangers of anthropomorphizing LLMs and how to fine-tune them for better outcomes. 🙏🏽
Josh Berson is reading from his forthcoming novel Autologous, on Friday, 10 March, 7–9pm PT at The Havana Social Club in Seattle. Save the date if you’re in the area!
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End note
In last week’s edition of the Sunday Newsletter, there was a mix-up with the dates of the Microsoft and Google AI search announcements. We wrongly highlighted the dates of the announcement on the day of the large stock price changes. The actual announcements happened earlier on Twitter (the 6th for Google & the 7th for Microsoft). Thanks to Ty Henkaline for picking up on this!
🙏🏽 And a quick request. In the past few weeks we’ve had record open rates and reads on this wondermissive. If you are enjoying it, please take a moment to forward this to a friend with a recommendation!
Thanks,
Azeem
Of course, another angle is whether deep tech entrepreneur now need to better provenance their source of capital. Will Western governments actively encourage local firms to avoid Chinese capital, for example? Or vice versa?
*zombies (not zombie’s)