The slowdown predicted by some in AI funding didn’t materialize in the first quarter.
Venture funding for AI startups actually increased in Q1 2024 in comparison with Q4 2023, Crunchbase data to introduce. In the first quarter, $12.2 billion was invested in venture-backed AI startups across 1,166 deals. The dollar figure represents a modest 4% increase over last yr’s final quarter, when $11.7 billion went to similar startups across 1,072 deals.
However, this is a 25% decline from the $16.3 billion reported in the first quarter of last yr, although an vital caveat is that this was the quarter OpenAIan impressive round of over $10 billion from Microsoft — the largest of several massive rounds last yr that put AI funding into hyperdrive.
Large rounding down
In fact, there was only one $1 billion round in the last quarter, whereas there have been several rounds last yr that helped boost AI funding to levels never seen before. There were only three rounds price greater than $320 million in the first quarter. While still impressive, it appeared like the AI startup was increasing such rounds on a weekly basis just last summer, when the industry saw some of the largest raises of 2023.
The three largest AI rounds of the quarter were:
- In February, a Chinese artificial intelligence start-up Moonshot AI The Foundation’s funding round raised over $1 billion Alibaba Group Holding and HongShan, formerly Sequoia, the capital of China.
- The same month, based in Sunnyvale, California Character — which creates robots enhanced with artificial intelligence — supposedly raised a massive round of $675 million at an initial valuation of around $2 billion. Well-known investors in the round include: Jeff Bezos‘ Browse investments AND Nvidia among others. The company is developing artificial intelligence robots that it hopes will have the ability to perform hazardous jobs and ease labor shortages.
- Based in China in March MiniMaxwhich develops artificial intelligence technology to convert text into visual and audio components, raised $600 million in Series B funding.
Regardless of a possible large round of slowdown, entities writing checks to startups are noticing great interest in the still developing market.
“Artificial intelligence is real, just like SaaS and e-commerce,” he said Michael Marxwho invests in AI/ML startups and is a founder and managing partner in San Francisco Celeste’s capital.
Marks, who sits on the boards of AI startups including: Whiterabbit.ai, H2O.ai AND Quartic.aisaid that while valuations in the AI space are fluctuating, startups that apply AI to specific industries or problems – resembling video surveillance, insurance or health care – proceed to draw investor interest in addition to hardware developments.
In fact, recent transactions show that investors are still willing to supply a premium to some firms in this industry. This month it was like that reported Launching AI search AI embarrassment will seek one other $250 million-plus in financing at a valuation of $2.5 billion to $3 billion on the same day the company formally announced its $62.7 million round supposedly values the company at over $1 billion. Just in January, the company raised $73.6 million in a Series B round that valued it at $520 million.
What’s next
Venture capitalists and strategists might also be excited about what they may see in the public market. Although everyone noticed it Nvidiarising share price, Astera’s laboratorydeveloper of knowledge center connectivity technologies with applications in generative artificial intelligence, went public at the end of the quarter and saw its stock value soar
Doing so will likely only increase investor appetite for AI, as an lively exit market only creates more enthusiasm.
However, not all the news has been good for AI startups these days. Just this month, there’s trouble with an artificial intelligence startup AI stability — which raised $101 million, led by Coat, Partners of the Lightspeed enterprise AND O’Shaughnessy Ventures in 2022 – laid off 10% of the workforce, transl report. Another AI startup, For mewhich developed the artificial intelligence generative presentation tool introduced several years ago, announced that it has laid off about 20% of its nearly 60 people.
It is unattainable to say whether these layoffs could also be a harbinger of a slowdown in AI, but the reason for such moves could also be the inability to acquire secure financing. However, based on what the past yr has shown, it seems unlikely that investors will stop opening their checkbooks to AI-related technologies.