Despite a broader decline in venture capital, AI startups raised $11.8 billion in Q3 2024, representing 30% of total funding. Investor interest remains strong despite challenges like chip restrictions and valuation concerns.
Artificial intelligence entrepreneurs experienced another quarter of robust cash infusions, despite a general decrease in venture capital funding.
AI startups raised $11.8 billion in the past 90 days, equivalent to 30% of the total venture capital funding in the third quarter of 2024, according to data compiled by analytics company Stocklytics.
Despite the United States heightened export restrictions on AI processors, valuation uncertainties, and previously disappointing earnings from startups, the surge occurred, resulting in a mixed landscape for investors.
The analysis indicates that investors’ interest in AI firms remains robust despite their increased prudence in selecting which ones to support.
Neil Roarty, an analyst at Stocklytics, observed that the $11.8 billion in new capital generated is comparable to the quarterly figures observed in 2023 and 2024, except the absolute record of $29.6 billion raised in Q2 2024.
The number of transactions decreased by 28% year-over-year to 79 in the third quarter, a decrease from 110 in the same period of 2023, resulting in a decrease in the deal count.
Roarty stated that the sector’s sentiment has remained positive due to the larger transactions. Additionally, there was a 13% decrease in the aggregate volume of venture capital funding year over year.
Investors have invested nearly $53 billion in the AI sector thus far this year, which is 35% more than the first three quarters of 2023, according to Crunchbase data. OpenAI’s most recent $6.6 billion round, valued at $157 billion, is among the most noteworthy transactions.
The cumulative funding amount in the AI sector has now exceeded $241 billion with the figures from this quarter, with US companies raising nearly 65%, or $155 billion. Asian AI businesses have raised $53 billion, while European AI firms have secured $30.2 billion.
The convergence of blockchain technology and AI is one of the primary wagering strategies of venture capitalists.
Pantera Capital’s portfolio manager Cosmo Jiang told Cointelegraph in a previous interview, “I am particularly enthusiastic about the potential of the convergence of AI and Crypto, although even that distinction will seem antiquated in a few years.”
VanEck, an investment manager, announced a new venture fund on October 9 specifically designed to support AI and crypto enterprises. The fund has $30 million to invest in pre-seed and seed-stage companies.