The State of AI Funding (Part I)
#AI #Finance
Generative AI (GenAI) has garnered significant attention from investors. This emerging technology promises a new wave of innovation and potential for transformative applications across a wide range of industries. As of Q2'23, the year 2023 has already marked a record-breaking period for investments in startups specializing in generative AI. A total of $14.1 billion in equity funding has been raised through 86 deals.
The GenAI space is still largely nascent and more than half of these companies are still at the Series A funding stage or earlier. Undoubtedly, investors who will invest at the seed or Series A stage will enjoy a competitive edge when it comes to returns.
Which areas are attracting funding in specific? Since substantial financial investment is required for the development of large language models, the generative AI infrastructure sector has attracted more than 70% of funding since Q3'22 across just 10% of all generative AI deals. The majority of this funding is a result of investor enthusiasm for fundamental models and APIs, as well as the growth of infrastructure such as MLOps (machine learning operations) and vector database technology (a specialized database system for efficiently storing and managing vector data, which is crucial for tasks like similarity searches in applications such as ML and AI).
It seems that AI assistants & HMIs are an investor favorite! Here is a breakdown based on research by CB Insights:
