AI start-up funding hit a record $97 billion in 2024

BLOOMBERG: Venture capitalists put $97 billion into artificial intelligence start-ups in the US last year — a new record in a year of multibillion-dollar mega rounds for companies like Elon Musk’s xAI, OpenAI and Anthropic.

The AI-focused deals represent an increasing share of all start up investment, according to new PitchBook data released Tuesday. Almost half of the total $209 billion raised by US start-ups last year went to AI companies, the research firm said, the highest portion on record.

The total amount of funding for start-ups ticked up fr the year, rising by about one-third from 2023. Meanwhile, VCs themselves raised $76.1 billion for 508 funds, the lowest number since 2014, and the lowest dollar amount since 2019.

The numbers demonstrate the ongoing bifurcation in venture: Large, stablished firms have found it easier to raise money, as have some of the biggest, buzziest start-ups. While more cash gets lavished on artificial intelligence companies, many plain-vanilla start-ups in formerly hot sectors like enterprise software are having trouble raising money at once achievable valuations, reflecting a longstanding post-pandemic trend in the industry.

A closely watched metric of initial public offerings and acquisitions of start-ups – also called exits – brought in $149.2 billion for the year, almost $30 billion more than 2023 and about the same as 2022.

VCs and start-ups outside the US had a more difficult year. Start-up funding in Europe declined to $61.6 billion in 2024, compared to $66.7 billion in 2023, Pitchbook found. And deals in Asia declined to $75.9 billion from $100.1 billion in 2023.