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Venture capitalists are gobbling up term sheets for startups peddling artificial intelligence, even as they remain picky when it comes to funding the wider spectrum of technology.
According to new figures from analytics firm Dealroom, AI startups raised $110 billion in funding last year, up 62% on the year before. At the same time, privately-backed companies (startups and scale-ups) across the whole of the technology spectrum raised $227 billion in 2024, down 12% from 2023 figures.
Yoram Wijngaarde, the founder of Dealroom, has been analyzing and advising in the tech industry for decades. Although marketplaces had a barnstorming moment in the late 1990s and early 2000s in terms of investor attention, nothing has come even close to the impact AI has had on investing in terms of activity and value. “This is the biggest wave ever by absolute amounts invested,” he said. “There’s never been anything like it.”
Part of the reason for that, it seems, is the fact that there is a wider ecosystem that’s being touched by it, covering hardware and infrastructure, applications, foundational models and more.
A list of some of the biggest AI company raises in 2024 speaks to the different areas that are attracting attention right now. Anthropic (Large Language Models, Generative AI), Waymo (self-driving), Anduril (defense), xAI (applications), Databricks (processing and managing data, especially AI data) and Vantage (data centers and infrastructure, growth fuelled by the need to train and query data) are among the top-ten biggest fundraisers of 2024.
Although OpenAI feels like the poster child for AI right now, it did not raise the most money last year. OpenAI picked up $6.6 billion, versus $10 billion for Databricks.
Yet with the most funding in aggregate — more than $20 billion to date, with another $40 billion reportedly in the works — and a massively viral app in the form of ChatGPT, OpenAI has come to represent a kind of bellwether in the industry.
And so unsurprisingly, its two biggest business interests, foundational AI and Generative AI, appear to be the engines underneath all of VC activity, with GenAI companies raising $47.4 billion in 2024, and foundational AI technology overtaking AI applications with the most growth (and a giant slice of funding) over the last two years.
The Dealroom report was commissioned to coincide with a week of AI events in Paris around the French government’s AI Action Summit. Part of the event’s agenda is focused on the question of how to champion more equitable AI development across more markets, beyond the U.S.
For those who believe AI companies are under-supported outside of that market, Dealroom’s figures lay bare how that works. A full 42% ($80.7 billion) of the VC raised in the U.S. went to AI startups, compared to just 25% ($12.8 billion) in Europe and even less, 18%, across the rest of the world. China was the standout last year at $7.6 billion invested.
“In Europe we have a bit of an innovators’ dilemma,” said Wijngaarde. “We don’t want to replace what we have and that can a be less aggressive position.”
How will 2024 AI funding play out in 2025?
One of the reasons why AI startups have raised so much money has been because of the costs of building and operating these services: large language models cost a lot in computing infrastructure to build and run. The emergence of DeepSeek and other projects like this one that built a rival to an OpenAI model for just $50 present an alternative approach built on open source. Is that something that we will see develop further in the year ahead?
So far, the prospects for open source companies have been fairly modest, even with the outsized presence of Mistral (which bills itself as open source) in Europe, and Meta’s efforts in the space.
Dealroom says that some 12% of AI VC funding last year went to startups building open source AI. “However, there is considerable grey area for what is considered open source or not,” Orla Browne, its head of insights, told me. “For example xAI is not included in these figures, as while Grok-1 was open source, Grok-2 is currently not. With the inclusion of xAI alone the percentage would rise to 22%.”
Beyond outsized funding value, for AI startups looking to match up with VCs that are most interested in the field, Dealroom found that Antler made the most investments in the field last year, followed by a16z, General Catalyst, Sequoia and Khosla Ventures rounding out the top five.
