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AI Startup Raisings Jump 40% in Q1: How To Ride This Wave?

Last Updated March 6, 2024 10:44 AM
Giuseppe Ciccomascolo
Last Updated March 6, 2024 10:44 AM

Key Takeaways

  • Artificial intelligence-focused startup raisings jumped in the first three months of 2024.
  • US companies lead the ranking, followed by Asian and European ones.
  • A Californian startup received $675 million from famous investors.

Artificial intelligence (AI) focused startups remain in the spotlight for venture capital investors, following a robust $25.5 billion fundraising in the previous year,

Recent strong funding activity in the past two months has propelled AI startups to surpass the 2023 first quarter figures by almost 40%, with a total of $5.7 billion raised year-to-date, marking a significant uptick in investment.

More Funds With Fewer Transactions

The AI market’s remarkable expansion has captured significant attention from venture capital investors in recent years. Since 2020, the market has nearly tripled , projected to reach $305 billion in revenue with 315 million users in 2024. Amid a general decline in VC funding across various sectors, AI companies have continued to attract investment.

Crunchbase data  highlights 2021 as a record year for AI startup fundraising. During that year, it secured an impressive $49.6 billion—more than double its score in 2020. Despite a 37% year-over-year dip in fundraising during 2022, AI startups still amassed almost $31 billion. This slowdown persisted in 2023, witnessing a total funding decrease of $5.4 billion compared to the previous year, totaling $25.5 billion.

AI startups total funding
AI startups total funding from Q1 2022 to Q1 2024 in billion USD l Source: Crunchbase

However, the funding landscape has rebounded in 2024, with AI startups securing more capital in the first two months than in the first quarter of 2023. So far this year, they have raised $5.7 billion, beating the first three months of 2023 by $1.6 billion.

Notably, while the total funding amount has increased, there has been a decline in the number of funding rounds. This suggests AI startups are efficiently raising more capital with fewer funding rounds. According to Crunchbase, there have been 46 VC investments in 2024 so far, down from 86 in the first three months of 2023.

Total Funding Tops $170 Billion

The AI startup market has seen a surge in funding, with nearly $6 billion raised since the start of the year, bringing the cumulative funding total to $173.5 billion.

Of this amount, more than 55% – equivalent to $96.2 billion – has been allocated to companies based in the United States, with California serving as the primary hub.

AI startups cumulative funding
AI startups cumulative funding from Q1 2014 to Q1 2024 in billion USD l Source: Crunchbase

Asian AI startups secured the second-highest funding value, reaching $46.7 billion. European companies follow with a total funding of $23.8 billion.

Machine learning startups have emerged as the top recipients of funding, garnering an impressive $79 billion thus far. Following closely are AI software and AI analytics startups, with $67 billion and $29 billion in funding, respectively.

The Figure Case

One of the AI-focused startups that is playing a pivotal role in raising funds is Figure. The California-based startup recently unveiled  a groundbreaking partnership with OpenAI alongside securing an impressive $675 million in venture capital funding. This influx of capital propels Figure to a significant capitalization of $2.6 billion.

Despite its youth and absence of a commercial product, Figure has attracted support from influential players within the tech industry who share its bold vision: the deployment of billions of human-like robots in workplaces and homes across the world.

Notable investors backing Figure include tech giants Microsoft, Nvidia, and the Amazon Industrial Innovation Fund, as well as Jeff Bezos through Bezos Expeditions. Additionally, key contributors include Parkway Venture Capital, Intel Capital, Align Ventures, ARK Invest, and OpenAI.

Among these investors is Parkway Venture Capital , an operator who has built and sold successful companies. It offers insight into the people and companies they invest in. And it has a strong investment portfolio based on AI companies.

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