Despite a slowdown in deal activity, family offices remain bullish on investing in AI startups. Last month, according to exclusive data from Fintrx, a private wealth intelligence platform, single-family offices made 40 direct investments, marking a 31% decrease from the previous month and a 47% year-over-year decline. However, AI-related startups accounted for half of these investments, highlighting the sector's enduring appeal. One notable example is quantitative AI firm SandboxAQ, which recently completed its Series E round, raising $450 million. CEO Jack Hidary disclosed to CNBC that the fundraising round was initially planned for a smaller amount but was upsized twice due to strong investor interest. Prior to this, the company secured $300 million in December from high-profile investors, including venture capitalist Jim Breyer, Salesforce CEO Marc Benioff, and Two Sigma co-founder David Siegel. This spring, SandboxAQ's fundraising continued with an additional $150 million, drawing support from Ray Dalio's family office, as well as corporate giants like Google and Nvidia, which had already invested in the company. Based in Palo Alto, California, SandboxAQ was spun off from Alphabet in 2022 and is chaired by former Google CEO Eric Schmidt, whose family office, Hillspire, is also among its backers. "Family offices and large institutions have gained a deeper understanding of the value that deep-tech startups bring to businesses," Hidary explained. "These are highly experienced executives and entrepreneurs who offer valuable advice and are actively engaged in our growth." SandboxAQ’s AI and quantum technology enable large-scale predictions and statistical analyses that can benefit various industries, such as drug discovery, cybersecurity, navigation, and financial modeling. The firm's technology processes vast numerical datasets to create predictive AI models, offering sophisticated solutions to complex problems. Hidary, a seasoned tech entrepreneur, noted a shift in the investment landscape over the past six to seven years. Family offices and large institutions have become more willing to invest in deep-tech startups, recognizing that these companies often have higher barriers to entry and thus lower risk. This contrasts with their previous approach, where they favored consumer-oriented tech products, which, though quick to attract users, were more susceptible to becoming commodities. The agility of family offices in making investment decisions is another factor, though some prefer to gain a thorough technical understanding before committing funds. For example, Jim Breyer met with Hidary several times to discuss technical aspects and even delved into two of Hidary's books. Ray Dalio's investment followed years of discussions about the economic impact of AI, which began in Abu Dhabi, UAE. "We need investors who share our long-term vision," Hidary emphasized. "We're building a global leader in the tech industry, and that requires a patient and committed partner. While we appreciate the enthusiasm, not every family office fits this profile." SandboxAQ's success underscores the growing importance of AI in business and the strategic value that family offices can bring to deep-tech startups. These investors' willingness to engage and their deep pockets are helping to fuel innovation and development in a sector that promises significant future returns.