AI Funding Breaks Records in 2024
Global venture funding in 2024 showed modest growth, surpassing 2023’s figures, with artificial intelligence (AI) experiencing the most substantial year-over-year increase. Crunchbase’s analysis reveals that overall startup funding in 2024 reached approximately $314 billion, a rise of about 3% compared to $304 billion in 2023. Global venture investment in 2024 also exceeded the pre-pandemic levels of 2019.
AI Takes the Lead
2024 was clearly the year AI companies secured the most funding. Nearly one-third of all global venture funding flowed into AI-related ventures, establishing AI as the leading sector for investment. Funding to AI-related companies exceeded $100 billion, an 80% increase from the $55.6 billion in 2023, according to Crunchbase data. The AI sector’s funding in 2024 outperformed every year in the past decade, even surpassing the peak global funding of 2021.
Of the total AI investment, almost a third went to foundation model companies, with the remaining two-thirds distributed among sectors benefiting from these innovative models. Infrastructure and data provisioning for AI management and operation also saw growth. Additional leading sectors that received funds included autonomous driving, healthcare, robotics, professional services, security and military, according to Crunchbase data.
Q4 Surge
The total funding in 2024 was boosted by a strong fourth quarter, which saw the highest funding total since the downturn in Q3 2022. The fourth quarter reached $93 billion, a 36% increase year over year from $69 billion in Q4 2023, based on Crunchbase’s data. Unlike recent years, where Q4 was typically slower, the 2024 fourth quarter concluded with the largest rounds raised during the year, totaling $22 billion from three companies.
Billion-Dollar Rounds on the Rise
In 2024, a greater share of funding went towards billion-dollar rounds, largely driven by investments in the AI sector. Billion-dollar rounds accounted for $58.3 billion—19% of total funding—compared to $45.8 billion—or 15%—in 2023.
The fourth quarter saw a boost with the year’s highest valuations. OpenAI received a valuation of $157 billion. Databricks was valued at $62 billion during the year’s largest venture deal, which was a $10 billion round. xAI doubled its valuation within six months, reaching $50 billion.
Not surprisingly, significant funding rounds in the past year went to companies in the AI sector. Databricks, OpenAI, and xAI were among the most notable, but Waymo and Anthropic also raised at least $4 billion, or much more. Other sizable valuations went to CoreWeave ($19 billion), Anthropic ($18.4 billion), Anduril Industries ($14 billion), Scale AI ($13.8 billion), and Perplexity ($9 billion).
US Leads, Silicon Valley Thrives
Venture funding to U.S. companies totaled $178 billion, representing roughly 57% of the global total. The U.S. funding market increased its proportion of global funding, up from 48% in 2023. Of this U.S. funding, $90 billion was invested in the San Francisco Bay Area, which benefited from the surge in AI investment. In 2023, companies in the Bay Area raised total funding of $59 billion.
Late-Stage Growth in Q4
Late-stage funding in the fourth quarter was robust, reaching $61 billion, a more than 70% increase quarter over quarter, and a year-over-year rise from the $36 billion invested in Q4 2023, according to Crunchbase data. The significant difference in Q4 compared to the previous year was the increase in billion-dollar rounds. Substantial funding was raised across several sectors, including AI, applied AI, energy, semiconductors, banking, security, and aerospace, amongst others.
Early Stage and Seed Funding
Early-stage funding remained flat in Q4, with substantial rounds going to data centers, renewable energy, AI, robotics, and biotech. Seed funding saw a slowdown in Q4, reaching $7 billion, which was 16% less than the $8.4 billion invested the previous year. However, seed funding amounts are often added to the Crunchbase dataset after the end of a quarter/year, so these numbers are subject to change.
Liquidity Issues
Exits saw a slow year in 2024. M&A activity was slightly up compared to 2023, but slower than anticipated and somewhat concentrated in the biotechnology and cybersecurity sectors. Microsoft, Alphabet, and Amazon hired AI teams from Inflection AI, Character.ai, and Adept AI, respectively, as the regulatory environment hindered strategic deal-making. Nvidia was the most active acquirer in this cohort in 2024.
The IPO market was similarly slow in 2024. The market ended on a positive note due to the unexpected boost from the ServiceTitan IPO, which is currently up more than 40% above its IPO price. According to Beezer Clarkson, a partner at Sapphire Partners, in an interview, an opening up of IPO markets in 2025 will increase LP allocation to venture. “History just shows very clearly that when there’s positive liquidity, more money goes into venture funds,” she said.
Methodology
The data in this report comes directly from Crunchbase, based on reported data. Information is current as of January 3, 2025. Data lags are most noticeable at the earliest stages of venture activity, with seed funding amounts increasing significantly after a quarter or year ends. All funding values are in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported.
