OpenAI and Anthropic continue to lead a fundraising bonanza in the artificial intelligence space, achieving historic rounds and stratospheric valuations.
But when it comes to finding AI opportunities for venture capitalists, the market is very different.
AI startups raised $104.3 billion in the U.S. in the first half of this year, nearly matching 2024’s total of $104.4 billion, according to PitchBook. Nearly two-thirds of all U.S. venture capital funding went to AI, up from 49% last year, PitchBook said.
The biggest deals follow a familiar theme. OpenAI raised a record $40 billion in March in a round led by SoftBank. Meta invested $14.3 billion Evolving AI in June as part of the recruitment of CEO Alexandr Wang and a few other high-level staff members. OpenAI rival Anthropic raised $3.5 billion, while Safe Superintelligence, a nascent startup launched by OpenAI co-founder Ilya Sutskever, raised $2 billion.
While Meta’s massive investment in Scale AI amounted to something of a lucrative exit for early investors, the general trend has been that far more money is coming in than going out.
In the first half, there were 281 venture-backed exits totaling $36 billion, according to PitchBook. This includes the approximately $700 million acquisition of EvolutionIQan AI platform for disability and injury claims management, by CCC Intelligent Solutions, and the public list of Slide insurancewhich creates AI-driven insurance offers for homeowners. Slide is valued at approximately $2.3 billion.
“The dominant exit trend right now is frequent but lower value acquisitions and fewer IPOs with significantly higher value,” said Dimitri Zabelin, PitchBook senior research analyst for AI and cybersecurity.
by CoreWeave The IPO, which took place at the very end of the first quarter, was the exception on the infrastructure side. The stock soared 340% in the second quarter and the company is now valued at more than $63 billion.
Zabelin said the trend of investing more in apps with smaller contracts has been in place since last year.
“Vertical solutions tend to more easily fill existing gaps in the business,” Zabelin said.
The wave of acquisitions is driven in part by what Zabelin calls targeted deals in which large companies buy smaller startups to improve their own future valuations, hoping to increase their value before a future sale or IPO.
“This is also due to the current liquidity conditions in the macro environment,” Zabelin said.
Outside of AI, activity is slow. U.S. fintech funding fell 42% in the first half to $10.5 billion, according to Tracxn. Cloud software and cryptography also saw sharp declines.
Zabelin said IPO activity could pick up if economic conditions improve and interest rates fall. Investors clearly want opportunities to back promising AI companies, he said.
“The appetite for AI, particularly for vertical applications, will remain robust,” Zabelin said.
— CNBC’s Kevin Schmidt contributed to this report.
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