The AI industry has shown impressive resilience to the Venture Capital funding drop seen in most sectors this year. While other markets saw a significant downturn in fundraising, AI companies and startups have become the new shiny object for investors, raising much more fresh capital than last year.
According to data presented by AltIndex.com, AI companies have raised nearly $50bn year-to-date, the second highest figure in the market’s history.
The global AI industry has more than doubled in just three years, reaching a $240bn value and a quarter of a billion users worldwide. This impressive growth has drawn a lot of attention from VC investors who poured billions of dollars into AI companies and startups. Despite the overall VC funding slowdown, the strong fundraising activity continued this year, tuning 2023 into the second-best year for fundraising in the AI market’s history after 2021.
According to Crunchbase data, AI companies and startups raised $78.5bn that year alone, more than double the amount seen in 2020. After a fantastic 2021, the fundraising activity dropped by 42% year-over-year, but AI companies still raised a massive $45.2bn in 2022. However, statistics show 2023 was even more successful, with companies and startups working in this space raising $4.5bn more than last year, or $49.8bn in total.
Nearly 60% of that value, or $28.8bn, was raised in the first half of the year, showing a slight 4% drop compared to the same period last year. But the fundraising activity soared in the year’s second half, with AI companies raising another $20.9bn in funding rounds, almost 40% more than in H2 2022.
And while the total funding amount increased by $4.5bn year-over-year, the number of investments was actually below 2022 figures, meaning that AI companies managed to raise more fresh capital in fewer funding rounds. Statistics show the AI industry saw 842 VC investments this year, down from 1,101 in 2022.
With nearly $50bn raised in funding rounds this year, the cumulative funding amount in the AI space has climbed to an impressive $333bn.
Around 55% of that value, or $189bn, went to companies from the United States, with California as the leading hub. Asian AI companies raised the second-highest value in funding rounds, or over $96bn, and European companies follow with $35.3bn in total funding.