This column is a look back at the week that was in AI. Read the previous one here.
While many of us took some time off during the holidays, AI startups did not take a break from fundraising.
The fourth quarter was unlike any other in the industry as far as fundraising goes. It also wasn’t just Databricks (although, yes, a massive $10 billion round does pump up the numbers).
In early October, OpenAI announced its long-awaited raise of $6.6 billion at a post-money valuation of $157 billion led by Thrive Capital.
The following month, xAI raised another $6 billion in a funding round valuing it at $50 billion, The Wall Street Journal reported. The new round includes investment from the Qatar Investment Authority, Valor Equity Partners, Andreessen Horowitz and Sequoia Capital.
Finally, also in November, Amazon agreed to invest another $4 billion in AI startup Anthropic — giving the Seattle-based e-commerce and cloud titan a minority stake.
Those deals made LogicMonitor’s $800 million round and Tenstorrent’s nearly $700 million in a Series D funding seem quaint by comparison.
All in all, Q4 saw more than $42 billion invested into AI-related startups, per Crunchbase data. That was nearly twice as much money invested in Q3 2024 — which was a record at the time. It also was about 3.5x the amount invested in Q4 2023.
Deals down
Perhaps not surprisingly, considering all the massive rounds that inflated the dollars, deal flow actually was down. Only 1,100 funding deals for AI-related startups were consummated in Q4. That’s down from 1,301 rounds announced in Q3, and 1,338 rounds announced in the same quarter in 2023.
While the decline in deal volume isn’t shocking when considering the $26 billion-plus invested in four rounds alone, it is a noticeable 15% or so drop from previous quarters.
Nevertheless, nearly a third of all global venture funding went to companies in AI-related fields as funding to AI-related companies reached over $100 billion, per our global venture funding report. Investors’ insatiable appetite in all things AI clearly didn’t dissipate last year — let alone in Q4, in particular, when it went completely off the charts.
If anything, the AI investment craze is still at its height. That may be a good thing for investors to remember when considering whether or not to write that next big check.
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Illustration: Dom Guzman
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