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AI has dominated the venture landscape in 2024, reshaping how capital is allocated and how investors think about the future of technology. What started as a wave of excitement around foundation models has now translated into tangible market trends: billion-dollar rounds are becoming the norm and AI infrastructure is attracting record investment.
Below, we break down the key funding trends shaping AI and the broader venture market in Q4 2024.
Total startup funding in 2024 neared $314 billion, reflecting a 3% increase from the $304 billion recorded in 2023, according to a Crunchbase data analysis. AI funding exploded in 2024 reaching more than $100B, up 80% from 2023.
Nearly one-third of global venture funding was directed toward AI-related companies, establishing artificial intelligence as the top-funded sector. Of this total AI funding, almost one-third went to foundation model companies.
Two-thirds of the remaining total VC funding flowed into sectors influenced by these emerging models. Investments surged in infrastructure and data provisioning to support AI management and operations. Other key sectors attracting capital included autonomous driving, healthcare, robotics, professional services, security, and military applications.
The increase in total funding for 2024 was largely driven by a strong fourth quarter, which saw the highest funding levels since the downturn in Q3 2022. Q4 reached $93 billion, which was a 36% increase year over year from $69 billion in Q4 2023.
Historically, Q4 tends to be a slower funding period. However, in 2024, it closed with some of the year’s largest deals—three companies alone secured a combined $22 billion.
A significant portion of 2024’s funding was concentrated in billion-dollar rounds, largely fueled by investments in AI. These mega-rounds accounted for $58.3 billion, or 19% of total funding, compared to $45.8 billion (15%) in 2023.
As expected, the largest funding rounds in 2024 went to AI companies. OpenAI and Databricks secured the year’s largest venture deals, each raising $10 billion.
The fourth quarter saw record-high valuations, with OpenAI reaching $157 billion, Databricks at $62 billion, and xAI doubling its valuation to $50 billion in just six months. Other notable AI valuations included:
Venture funding in the US reached $178 billion, accounting for 57% of global investment—up from 48% in 2023. A significant driver of this growth was the San Francisco Bay Area, which saw a sharp rise in funding, growing from $59 billion in 2023 to $90 billion. Once again, this surge was largely fueled by increased investment in AI-related technologies.
Late-stage funding in Q4 hit $61 billion, up more than 70% quarter over quarter and significantly higher than the $36 billion invested in Q4 2023. As mentioned above the biggest shift was the rise in billion-dollar rounds across multiple sectors, including AI, applied AI, energy, semiconductors, banking, security, and aerospace.
Early-stage funding showed little change in Q4, with large rounds primarily flowing to companies in data centers, renewable energy, AI, robotics, and biotech.
Seed funding declined in Q4, totaling $7 billion—a 16% drop from $8.4 billion in Q4 2023. However, seed investments are often reported later in datasets, meaning these figures could rise as more deals are recorded.
Exits remained sluggish in 2024.
M&A activity showed a slight uptick compared to 2023 but fell short of expectations, with most deals concentrated in biotech and cybersecurity.
Among major tech firms, Microsoft, Alphabet, and Amazon expanded their AI capabilities by acquiring teams from Inflection AI, Character.ai, and Adept AI, respectively, as regulatory barriers limited larger acquisitions. Nvidia stood out as the most active acquirer in 2024 within this group.
While the IPO market remained slow, it ended on a high note with ServiceTitan’s IPO, which has gained more than 40% above its initial offering price. Looking ahead, a more active IPO market in 2025 could help drive increased LP allocations to venture capital. As Beezer Clarkson, a partner at Sapphire Partners, put it: “History shows very clearly that when there’s positive liquidity, more money goes into venture funds.”
The AI funding surge of 2024 has set the stage for a transformative period in venture capital. With late-stage rounds booming, valuations reaching new highs, and foundational AI models becoming deeply embedded in multiple industries, it should be clear to most that AI is not just another investment trend. It’s a structural shift.
That said, challenges remain. Liquidity is still a major concern, and while exits are slowly returning, the IPO window remains tight. The question will be whether the capital intensity of AI can be sustained and how quickly real-world applications can generate returns.
This overview is based on data sourced by Crunchbase.
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