AI funding surges in 2024, as U.S. investors are seeking opportunities to invest in this rapidly growing but still emerging technology.
According to a Statista Oct. 28 report based on Crunchbase data available via EY, AI-related investments made up 33% of all funding directed toward U.S.-based, VC-backed companies in the first nine months of 2024.
The share of such investments has been growing rapidly in the last few years. It went up from 14% in 2020, keeping similar levels during 2021 and 2022, to surge to 28% in 2023 and 33% in the first three quarters of 2024, and could go even higher in the years ahead.
Non-AI companies still receive the majority of the funding, but the ongoing increase in AI-related investments is still expected to be just the beginning of a longer-term trend.
As the technology is still in its nascent stage, much of the current funding in the field is concentrated on establishing the foundational aspects of AI, such as developing and training models. When this initial wave of investment curbs, entrepreneurs will still need to explore practical applications to harness AI’s potential, likely sparking a second wave of AI-focused investments.
An analysis of Crunchbase data by EY reveals that AI deals represented 37% of the $38 billion raised by VC-backed companies in Q3 2024, with four of the ten largest deals that amounted to nearly $7 billion involving AI-focused companies.
Large AI deals were the backbone of the VC market amid ongoing stagnation. Overall, in Q3 2024, VC-backed companies raised $38.0 billion, a 12% decrease from Q2 2024. Average deal volumes were lower than in the previous quarter and deal count also continued to decline.
Mega-rounds were down quarter over quarter, too. Two out of three deals worth more than $1 billion involved AI-related companies. The third one was an aerospace and defence company. At the same time, not only AI companies are attracting large funding. The healthcare segment continues to hold steady, even surpassing IT by the number of mega-round deals.
You might be wondering Is Investors’ Focus on AI Impeding Other Business Segments? Learn about it in our latest analysis of the investment market.
