In case there was any doubt, the next generation AI bubble didn't burst in 2024.
AI powered apps; Investments in next-generation AI, which spans a range of tools and services, include text, pictures, videos, conversation Last year reached an all-time high for producing music and more. Generative AI companies worldwide will receive $56 billion from VCs by 2024 through 885 deals, according to data from financial tracker PitchBook compiled for TechCrunch.
That raw total is a new record for the segment. 192% up from 2023 when invested. bet $29.1 billion into next-generation AI startups across 691 deals.
“We don't see a slowdown in next-generation AI funding as big names like OpenAI, Anthropic and xAI continue to get big improvements and competitive new products,” Ali Javaheri, emerging technology analyst at PitchBook, said in an interview. .
By Q4 2024, the deal value rose to $31.1 billion Databricks' $10 trillion Series J, xAI's $6 billion Series C, Anthropic's $4 billion strategic investment from Amazonversus OpenAI's $6.6 billion round.
Mergers and acquisitions account for a small share of generative AI investment by 2024: $951 million, according to PitchBook data. To be clear, It's Google, Microsoft, and various “leaseback” agreements executed by Amazon are exclusive. Google News is available. It paid $2.7 billion to hire several chatbot startups. Character AIMicrosoft already licenses its technology to employees. He said. It spent $620 million on licensing. InflammationHired AI models and its CEO, Mustafa Suleyman.
American companies attracted a lot of Generative AI support last year. Startups outside the US received only $6.2 billion of all 2024 VC investment. But there have been major victories, such as the one based in Beijing. Moonshot AI ($1 billion) in February; France begins. U Tun Tun in June ($640 million); Cologne based company DeepL in May ($320 million); Shanghai-based company MiniMax ($300 million in March) and Tokyo-based Sakana AI ($214 million in February).
So what could happen in 2025?
Javaheri believes that the next-generation AI sector could be full of startups in very similar (or even identical) verticals and risks. his point At least four companies Developing an AI coding assistant — Promotion., Magic trick, Codiumversus By the pool – Exceeded $100 million last year. and many new generation media startups (eg Black Forest Labs, ElevenLabs) has recently raised tens of millions of dollars in funding at high valuations.
The trend is unsustainable due to pressure from investors to show revenue growth.
According to Javaheri, Technical challenges and the huge computational costs required to remain competitive may pose additional challenges for next-generation AI enterprises. “Only the best-funded startups can keep up with the momentum required for the most innovative models,” he added. “So most of the high value will come from the infrastructure layer.”
that's all, It's also good news for the new generation of “infrastructure layer” AI players who have done quite well for themselves in 2024. I like data center startups. Crusoe ($600 million in December) and Lambda ($320 million in February) represented some of the largest rounds of the next-generation AI market.
Investment firm KKR Estimated. Rising demand for data centers to support AI will boost global spending in the sector to $250 billion a year.