The hype surrounding generative AI has shown no signs of slowing down in 2024. In fact, the segment has seen a significant surge in investments, with $56 billion raised by generative AI companies worldwide across 885 deals, according to data from financial tracker PitchBook.
Record-Breaking Investments
The raw cash total is a new record for the segment, representing a 192% increase from 2023. In that year, investors poured $29.1 billion into generative AI startups across 691 deals. The growth of investments in generative AI has been staggering, with big names like OpenAI, Anthropic, and xAI continuing to secure major raises and release new, competitive products.
"We aren’t seeing a slowdown in generative AI funding," said Ali Javaheri, an emerging technology analyst at PitchBook. "Big names like OpenAI, Anthropic, and xAI continue to secure major raises and release new, competitive products."
Q4 2024 Sees Soaring Deal Value
Deal value in Q4 2024 soared to $31.1 billion with the closure of mammoth rounds like Databricks’ $10 billion Series J, xAI’s $6 billion Series C, Anthropic’s $4 billion strategic investment from Amazon, and OpenAI’s $6.6 billion round.
Mergers and Acquisitions in 2024
Mergers and acquisitions were a small share of generative AI investments in 2024, with $951 million raised through M&A deals. This is exclusive of the various ‘acqui-hire’ deals executed by Google, Microsoft, and Amazon.
Google reportedly paid $2.7 billion to hire much of chatbot startup Character AI’s staff and license its technology, while Microsoft is said to have spent $650 million licensing Inflection’s AI models and hiring its CEO, Mustafa Suleyman.
U.S. Companies Dominate Generative AI Funding
U.S. companies attracted the bulk of generative AI backing last year, with startups outside the U.S. nabbing just $6.2 billion of all 2024 VC investments in the market.
Some notable winners included:
- Beijing-based Moonshot AI ($1 billion in February)
- French startup Mistral (~$640 million in June)
- Cologne-based company DeepL ($300 million in May)
- Shanghainese firm MiniMax ($600 million in March)
- Tokyo-based Sakana AI (~$214 million in September)
Will 2025 See a Slowdown?
Javaheri believes that the generative AI sector risks becoming oversaturated with startups in exceedingly similar (or even identical) verticals. To his point, no fewer than four companies developing AI coding assistants – Augment, Magic, Codeium, and Poolside – closed rounds in 2024.
The Future of Generative AI
As the segment continues to grow, it will be interesting to see how investments and funding evolve in the coming years. Will we see a slowdown in 2025? Only time will tell.
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