Investments in artificial intelligence soared in 2024, with AI startups attracting $110 billion in funding, marking a 62% increase from the previous year. However, overall startup funding declined by 12%, with tech companies securing a total of $227 billion. These insights come from analytics firm Dealroom, highlighting a shifting investment landscape.

Yoram Wijngaarde, founder of Dealroom, noted that no other sector has seen such a dramatic surge in funding as AI. "This is the biggest wave ever by absolute amounts invested," he said. The AI ecosystem spans various domains, including hardware, infrastructure, applications, and foundational models, all driving investor interest.

Several high-profile AI companies secured massive investments in 2024. Databricks led the pack with $10 billion, surpassing OpenAI, which raised $6.6 billion. Other major fundraisers included Anthropic, Waymo, Anduril, xAI, and Vantage, covering fields such as generative AI, self-driving technology, defense, and data infrastructure.

OpenAI remains a key industry benchmark, having raised over $20 billion to date, with reports suggesting an additional $40 billion in the pipeline. The firm's generative AI advancements, particularly ChatGPT, have propelled its influence, making foundational AI and generative AI the primary drivers of venture capital activity. Generative AI startups alone secured $47.4 billion in funding in 2024.

The Dealroom report coincides with AI-focused events in Paris, including the French government’s AI Action Summit. A key topic at these gatherings is fostering equitable AI development outside dominant markets like the U.S. Dealroom’s data underscores existing funding disparities: U.S.-based AI startups received 42% of global venture capital ($80.7 billion), while Europe secured 25% ($12.8 billion) and the rest of the world 18%. China stood out with $7.6 billion in AI investment.

Wijngaarde pointed out that Europe faces an "innovators’ dilemma," where reluctance to disrupt existing industries results in a less aggressive investment stance. This cautious approach contrasts with the U.S., where AI funding is surging at an unprecedented rate.

Looking ahead to 2025, AI funding trends remain uncertain. The high cost of developing and maintaining AI systems, especially large language models, has driven massive capital inflows. However, alternative approaches, such as open-source AI, are gaining traction. DeepSeek, for example, built an OpenAI rival for just $50, raising questions about the long-term sustainability of high-cost models.

Despite this, open-source AI still represents a small share of overall AI funding. Dealroom estimates that 12% of AI venture capital in 2024 went to open-source projects, though defining "open source" remains complex. xAI, for instance, was excluded from these figures since its Grok-2 model is not open source. Including xAI would raise open-source AI’s funding share to 22%.

In the venture capital landscape, Antler made the most AI investments in 2024, followed by a16z, General Catalyst, Sequoia, and Khosla Ventures. As AI continues to dominate investor attention, the question remains: Will the current funding momentum sustain, or will alternative AI development models disrupt the market?

SOURCE: TECHCRUNCH | PHOTO: IST

This article was created with AI assistance.