AI Continues to Attract Increasing VC Funding in the US
San Francisco: The Global Startup Hub
This week, San Francisco is more than ever the global hub for startups. The city is hosting TechCrunch Disrupt, a top event in the startup scene, attracting founders, investors, and other industry insiders from all over the world.
AI: The Star of the Show
The spotlight of this year's conference is on Artificial Intelligence (AI). Investors are keen to explore opportunities in this burgeoning yet still emerging field. Concurrently, founders of AI-related companies are eager to capitalize on the AI surge and secure new capital for their ventures.
AI's Growing Share in VC Funding
As illustrated in a chart by Felix Richter from Statista, AI has been drawing an increasingly larger portion of VC funding in the United States in recent years. In the first three quarters of 2024, AI-related investments constituted 33 percent of total investments in VC-backed companies based in the U.S. This represents a significant increase from the 14 percent recorded in 2020, and the trend is expected to continue in the coming years.
AI Investments in Q3 2024
Data from Crunchbase, analyzed by EY, reveals that AI deals made up 37 percent of the $38 billion raised by VC-backed companies in the third quarter of 2024. Among the 10 biggest deals, four involved AI-related companies.
The Future of AI Investments
The recent surge in AI-related investments is believed to be just the start of a long-term trend. According to EY's latest report on VC investments, the majority of the funds currently being directed into the field are focused on laying the groundwork for the technology, such as developing and training AI models. Once this initial wave of investment subsides, entrepreneurs will have to devise ways to actually harness the potential of AI. This is likely to trigger a second wave of AI investments.
Bottom Line
The growing interest and investment in AI are indicative of the technology's potential and the high expectations surrounding it. As the foundational work progresses, the focus will shift towards the practical application of AI, which could lead to a new wave of investments. What are your thoughts on this trend? Do you believe AI will continue to attract significant investments in the future? Share this article with your friends and let them know about this interesting development. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
