AI startups draw record $11.8B funding in Q3

Despite a general decline in venture capital funding, artificial intelligence startups saw another quarter of strong cash injections. 

According to data compiled by analytics company Stocklytics, AI startups raised $11.8 billion during the past 90 days, accounting for 30% of total venture capital funding in the third quarter of 2024. 

The surge occurred despite the United States increased export restrictions on AI chips, valuation uncertainties, and earlier disappointing earnings from startups, creating a mixed landscape for investors.

According to the analysis, although investors are being more selective about which AI startups to back, their overall interest remains strong. 

“The $11.8 billion of fresh capital is close to quarterly figures seen throughout 2023 and 2024, excluding the absolute record of $29.6 billion raised in Q2 2024,” noted Stocklytics analyst Neil Roarty.

The deal count declined, with the total number of transactions dropping by 28% year-over-year to 79 in the third quarter, down from 110 in the same period of 2023.

“The larger deals have kept sentiment in the sector positive,” said Roarty. The overall VC funding activity also slowed down, falling by 13% year-over-year. 

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Data from Crunchbase shows that investors have pumped close to $53 billion into the AI sector so far this year, or 35% more than in the first three quarters of 2023. Notable deals include OpenAI’s recent $6.6 billion round at a $157 billion valuation. 

With this quarter’s figures, the cumulative funding amount in the AI sector now tops $241 billion, with US companies raising almost 65% of that, or $155 billion. In total, Asian AI startups have raised $53 billion, while European AI firms have secured $30.2 billion.

One of the key betting strategies of venture capitalists is the convergence of AI and blockchain technology.

“I am particularly excited about opportunities at the convergence of AI and Crypto, although even that distinction will sound dated in a few years,” Pantera Capital’s portfolio manager Cosmo Jiang told Cointelegraph in a previous interview.

Investment manager VanEck announced a new venture fund on Oct. 9 targeting AI and crypto startups, with $30 million available for pre-seed and seed-stage companies.

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