Generative AI Startups Attracted Nearly $4 Billion Investment in Q3 2024
Despite some skepticism about generative AI’s return on investment, many investors remain bullish, as evidenced by recent funding data from PitchBook.
Excluding OpenAI’s $6.6 billion round, venture capitalists invested $3.9 billion in generative AI startups across 206 deals during Q3 2024. Of that total, $2.9 billion was invested in U.S.-based companies across 127 deals.
Among the largest funding rounds in Q3 were coding assistant Magic ($320 million in August), enterprise search provider Glean ($260 million in September), and business analytics firm Hebbia ($130 million in July). Internationally, China’s Moonshot AI secured $300 million in August, while Japanese scientific discovery startup Sakana AI closed a $214 million tranche in September.
Despite criticism from tech experts about its reliability and use of copyrighted material, generative AI continues to gain mounting traction in the industry, as evidenced by the heightened attention from VCs. These VCs are betting on generative AI’s widespread adoption across lucrative industries, believing its long-term growth will outweigh current challenges.
A Forrester report projects that 60% of current generative AI skeptics will eventually utilize the technology, whether consciously or not, for tasks ranging from summarization to creative problem-solving. This outlook is considerably more positive than Gartner’s earlier prediction that 30% of generative AI projects will be abandoned after the proof-of-concept stage by 2026.
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