Startup Funding Regained Its Footing In 2024 As AI Became The Star Of The Show

Global venture funding in 2024 edged above 2023’s totals, with AI showing the biggest leap in amounts year to year. Overall startup funding in 2024 reached close to $314 billion — compared to $304 billion in 2023 — up around 3%, based on an analysis of Crunchbase data.

Global venture investment in 2024 was above the pre-pandemic year of 2019, but below 2018 and 2020 amounts at $346 billion and $350 billion, respectively.

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Breakout year for AI

One thing was clear: 2024 was the breakout year for funding to AI companies.

Close to a third of all global venture funding went to companies in AI-related fields, making artificial intelligence the leading sector for funding. Funding to AI-related companies reached over $100 billion — up more than 80% year over year from $55.6 billion in 2023 — Crunchbase data shows. Funding to the AI sector in 2024 surpassed every year in the past decade, including the peak global funding year of 2021.

Of those AI dollars, almost a third of all AI funding went to foundation model companies.

The other two-thirds of funding went to sectors impacted by these new models. Infrastructure and data provisioning to manage and operate AI grew. Other leading sectors included autonomous driving, healthcare, robotics, professional services, security and military, Crunchbase data shows.

Q4 push

The higher total in 2024 was due to a big push in Q4 — which saw the highest funding total since the downturn in Q3 2022. The fourth quarter reached $93 billion, up 36% year over year from $69 billion in Q4 2023 , based on an analysis of Crunchbase data.

In recent years, Q4 was typically slower. The 2024 fourth quarter, however, closed with the largest rounds raised this year — $22 billion by three companies.

Large values, billion-dollar rounds

In 2024, a greater share of funding went to billion-dollar rounds, in large part driven by funding to the AI sector. In 2024, $58.3 billion — or 19% of all funding — went to billion-dollar rounds. Compare that with 2023, when $45.8 billion — or 15% of funding — went to rounds of a billion dollars or more.

The fourth quarter picked up steam with the largest valuations achieved last year. OpenAI was awarded a $157 billion valuation. Databricks was valued at $62 billion in the year’s largest venture deal, a $10 billion round. And xAI doubled its valuation in a six-month period, to $50 billion.

Not surprisingly, the largest funding rounds this past year went to companies in the AI sector — not only Databricks, OpenAI and xAI, but also Waymo and Anthropic raised funding of at least $4 billion — or much more.

Other large valuations to companies in AI went to CoreWeave ($19 billion), Anthropic ($18.4 billion), Anduril Industries ($14 billion), Scale AI ($13.8 billion) and Perplexity ($9 billion).

US gained, Silicon Valley fired up

Venture funding to U.S. companies totaled $178 billion — around 57% of total global funding. The U.S. funding market raised a greater proportion of global funding, up from 48% in 2023.

Of all U.S. funding, $90 billion was invested in the corridors of the San Francisco Bay Area, which experienced a boom from AI investing. Compare that with 2023, when Bay Area companies raised $59 billion in total funding.

Late-stage Q4 boom

Late-stage funding in the fourth quarter reached $61 billion, up more than 70% quarter over quarter and an increase year over year from the $36 billion invested in Q4 2023, Crunchbase data shows. The biggest change in Q4 from a year earlier was the increase in billion-dollar rounds. Large fundings were raised in multiple sectors such as AI, applied AI, energy, semiconductor, banking, security and aerospace, among others.

Early stage flat

Early-stage funding was flat in Q4. Large early-stage rounds went to data centers, renewable energy, AI, robotics and biotech.

Seed settled

Seed funding trailed in Q4, for now. Reaching $7 billion in Q4, seed funding was down 16% from the $8.4 billion invested a year ago. (However seed fundings are often added to the Crunchbase dataset after the close of a quarter, and should increase over time.)

Liquidity hold-up

It was a slow year for exits in 2024.

M&A activity was slightly up compared to 2023 — but slower than expected and somewhat concentrated in biotechnology and cybersecurity companies.

Of the magnificent seven,Microsoft, Alphabet and Amazon hired AI teams from Inflection AI, Character.ai and Adept AI, respectively, as the regulatory environment impeded strategic dealmaking. Nvidia was the most active acquirer in 2024 among this cohort.

The IPO market — also slow in 2024 — ended on a positive note with the unexpected bump from the ServiceTitan IPO, which as of the new year is above its IPO price by more than 40%.

An opening up of the IPO markets in 2025 will drive LP allocation to venture, said Beezer Clarkson, a partner at Sapphire Ventures, in an interview. “History just shows very clearly that when there’s positive liquidity, more money goes into venture funds,” she said.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Jan. 3, 2025.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman