Jan 7, 2025
The artificial intelligence sector witnessed unprecedented venture capital investment in the United States last year, with a staggering $97 billion funneled into AI startups. This surge marks a new high, according to a report by Bloomberg, highlighting significant funding rounds for companies such as Elon Musk’s xAI, OpenAI, and Anthropic.
AI-focused investments now comprise nearly half of the total $209 billion raised by US startups in 2024, as detailed by recent PitchBook data, which marks the most substantial proportion on record. Interestingly, the overall startup funding increased by about one-third from 2023 levels. In contrast, venture capitalists themselves saw a decrease in fundraising, accumulating $76.1 billion across 508 funds, figures from the IndexBox platform reveal. This represents the smallest number of funds and the lowest dollar amount since 2014 and 2019, respectively.
The data illustrates a marked bifurcation within the venture capital sector. Established firms and prominent startups are attracting significant investments, predominantly in the AI field, while conventional startups, particularly in traditional sectors like enterprise software, face challenges in securing funds at previously achievable valuations. This trend aligns with the post-pandemic shift in industry dynamics.
The avenue for startup exits through initial public offerings and acquisitions also showed vigor, returning $149.2 billion in 2024, nearly $30 billion more than in the previous year and paralleling 2022’s performance.
Conversely, venture capital activity outside the United States faced a downturn. European startup funding decreased to $61.6 billion, down from $66.7 billion in 2023, according to PitchBook findings, while Asian deals fell to $75.9 billion from $100.1 billion in the prior year, further underscoring this global investment recalibration.