Although the US government’s expanded export restrictions on AI chips to China, concerns about the AI giants` valuations, and disappointing earnings reports earlier this year sent shockwaves through the market, causing mixed investor sentiment, AI remains the top sector for investments. According to data presented by Stocklytics.com, AI startups raised $11.8 billion in Q3 despite the overall VC funding drop.
AI Startups Accounted for 30% of Total VC Funding in Q3
The AI sector remains a long-term growth opportunity for VC investors despite the volatility seen in recent months. Although they are being more selective about which AI startups to back, the overall interest remained strong and Crunchbase data proves this.
While VC funding activity slowed down in Q3, falling by 13% year-over-year, AI startups still managed to raise an impressive $11.8 billion, the sixth-largest quarterly figure in the market’s history. The $11.8 billion of fresh capital is close to quarterly figures seen throughout 2023 and 2024, excluding the absolute record of $29.6 billion raised in Q2 2024.
The deal count in Q3 also declined. Statistics show the total number of deals dropped by 28% year-over-year to 79 in Q3 2024, down from 110 in Q3 2023. Still, the larger deals have kept the sector optimistic. Over the past three months, the AI market saw several massive investments, such as $1 billion going to an early-stage California-based AI startup, Safe Superintelligence, looking to develop safe artificial intelligence systems.
Thanks to these massive funding rounds, artificial intelligence remained the most funded sector globally. According to Crunchbase, AI companies accounted for around 30% of total VC investments in Q3, much more than any other market.
Almost $53 Billion Raised Year-to-Date, the Highest Figure so Far
Despite the slight slowdown in Q3, AI startups already raised much more money than last year, turning 2024 into a record year for VC investments. According to Crunchbase data, VC investors poured close to $53 billion on fresh capital in the AI sector year-to-date, or 35% more than in the entire 2023. Moreover, that means AI startups have set a new record, outperforming 2021’s $49.4 billion, now the second-highest funding amount in the market’s history.
With $53 billion raised in funding rounds year-to-date, the cumulative funding amount in the AI sector has jumped to over $241 billion. US companies raised almost 65% of that value, or $155 billion, with California as the leading hub. Their Asian counterparts raised three times less money in funding rounds, or $53 billion, while European AI startups follow with $30.2 billion in total funding.
