AI Share Of Startup Funding Fluctuates Sharply By Stage

U.S. artificial intelligence startups are gobbling up a large share of funding at all stages. However, the biggest slice of investment is coming at late stage.

That was the broad finding from a Crunchbase analysis of funding by stage to companies in AI-related industry categories. Over the past year, nearly half of venture funding went to AI-related  enterprises, data indicates. Later stage had the largest share, with roughly 61% of venture deals related to AI.

By contrast, early stage had the smallest share of AI-related financing, at 30%, followed by seed at 38%.

Keep in mind: These are only stage-labeled rounds

The methodology we used comprised only early- and late-stage rounds that were labeled as a series. This included rounds from Series A and through Series J.

This approach excluded many deals labeled as corporate rounds or venture rounds of undisclosed stage. For instance, the totals did not include OpenAI’s $40 billion SoftBank-backed financing announced in March.

Even so, there were some pretty enormous AI-related rounds in the mix, including Databricks’ $10 billion Series J in December, xAI’s $6 billion November financing, and Anthropic’s $3.5 billion March financing.

What it means to skew later-stage

So how should we interpret data that shows AI scooping up its largest funding share at late stage?

Typically, when we see a subsector raising more at late stage than early stage and seed, it indicates that this is a maturing space. Startup sectors such as autonomous driving, logistics and online banking, for instance, had a flurry of seed and early-stage funding a number of years ago. Now the startup pipeline skews later stage.

However, this is probably not the accurate narrative for AI, given the capital intensive nature of scaling early leaders in the space. True, the GenAI platform startup pipeline is maturing, in a very cash-demanding manner. But talk to seed and early-stage investors, and they’re still very much AI-focused and enthused about areas including agentic AI and AI-enabled healthcare.

It’s also possible to see AI taking a smaller share at seed and early stage as a good thing, as it may indicate companies are able to get off the ground in a reasonably cash-efficient manner. We’ll see if it stays that way as they mature.

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Illustration: Dom Guzman