Global AI deal volume reached 1,245 in Q3 2024, a level not seen since Q1 2022, reflecting how confident and resilient investors are about investing in AI.
With 24% year-over-year growth, global AI deals far outpaced growth -10% decline quarter-on-quarter (QoQ) across the investment market. CB Insights notes in its State of AI Q3'24 report that despite the slowdown in overall enterprise trends, investor resilience and confidence in AI stays stay strong.
CB Insights says: “While AI deals in Q3 2024 included massive funding value greater than $1 billion to defense technology providers.” On the sensor and AI laboratory Secure superintelligenceIn fact, global AI funding fell 29% quarter-over-quarter.” The 77% quarter-over-quarter decline in funding from AI rounds exceeding $1 billion contributed to the 29% quarter-over-quarter decline.
The average AI deal size increased 28% this yr, rising to $23.5 million from $18.4 million in 2023. Increases in deal size this yr are driven by five rounds valued at over $1 billion this yr, including xAIs Series B value $6 billion at a valuation of $24 billion, Anthropics $2.8 billion Series D at a valuation of $18.4 billion, Andurils $1.5 billion Series F at a $14 billion valuation, G42 $1.5 billion investment from Microsoft and CoreWeaves $1.1 billion Series C at a $19 billion valuation. CB Insights points out that these deals alone aren’t solely chargeable for increasing the common, mentioning that the median AI deal size has increased by 9% up to now in 2024.
US-based AI startups attracted $11.4 billion in investments across 566 deals within the third quarter of 2024, accounting for over two-thirds of worldwide AI funding and 45% of worldwide AI deals. European AI startups received $2.8 billion from 279 deals and Asian AI startups received $2.1 billion from 316 deals.
Generative AI and industry-specific AI result in investments
The expected productivity gains and potential cost reductions enabled by generative AI and industry-specific AI are central to investor confidence and more AI business.
Companies have already learned to prioritize investments in genetic AI and broader AI investments that deliver measurable value at scale. This is one in all the most important aspects that continues to drive more enterprise capital investment than on other occasions. Gartner's Generative AI Planning Survey 2024 reflects how impatient management is for results, which correlates with CB Insight's results.
One of the important thing findings of the Gartner survey is that executives expect – and are driving – generational AI projects to extend productivity by 22.6%, driving revenue growth by 15.8% and value savings by 15.2% surpass. While cost efficiencies and revenue increases are vital, Gartner predicts that essentially the most immediate and substantial impact might be increasing operational efficiency. Gartner predicts that corporations that prioritize Gen AI integration will see significant increases in each workflow optimization and financial performance.
CB Insights provides a comprehensive evaluation of deals closed within the third quarter, reflecting the growing dominance of genetic AI and industry-specific AI investments. The following deals support this statement:
- Safe Superintelligence has raised a large $1 billion Series A round, indicating continued strong interest in large language models (LLM) and general-purpose AI systems.
- Baichuan AI, a Chinese generative AI company, secured $688 million in Series A funding.
- Moonshot AI, one other generational AI startup, has raised $300 million in a Series B round.
- Code generation and AI company Codeium became a unicorn with a $150 million Series C round.
- Anduril, an AI-powered defense technology company, has raised $1.5 billion in a Series F round, highlighting interest in AI for national security applications.
- ArsenalBio secured $325 million for AI in biotech and drug discovery.
- Helsing raised $488 million for AI applications in defense and security.
- Altana AI received $200 million for AI in supply chain management and logistics.
- Flo Health has raised $200 million for AI-powered women's health apps.
The number of latest AI unicorns greater than doubled within the third quarter
Gen AI continues to be one in all the most important catalysts for the creation and growth of unicorns (private corporations valued at over $1 billion). CB Insights found that the variety of unicorns greater than doubled in comparison with the previous quarter, reaching 13 in essentially the most recent quarter. This is 54% of the whole volume of total investments within the third quarter of 2024.
More than half of the AI unicorns launched last quarter are Gen AI startups. They goal a wide selection of areas, including AI for 3D environments (World laboratories), code generation (Codeium) and automation of legal processes (Harvey). New GenAI unicorns in 3Q24 include Safe Superintelligence, co-The company founded by OpenAI co-founder Ilya Sutskever received the best rating. The AI lab was valued at $5 billion after raising a $1 billion Series A round in September 2024.
The challenges facing Generation AI corporations are only starting
The potential of genetic AI and industry-specific AI to enhance productivity, create latest revenue streams and reduce costs ensures investors remain resilient and results-oriented.
From the numerous late-stage organizations receiving additional funding to startups and latest unicorns, the challenge might be to realize adoption at scale and robust enough to take care of recurring revenue while reducing costs.
As CIOs and CISOs look to cut back the tool and app overload that already exists, essentially the most successful startups will need to search out latest ways to embed and integrate Gen AI into existing apps and workflows. This might be difficult as every organization has its data management challenges, isolated legacy systems and the necessity to update its data accuracy, quality and security strategies.
Startups and unicorns that may overcome all of those challenges and improve their customers' operations at the info level first will most certainly deliver the outcomes that investors expect.
