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HomeBusinessAI Startups Raised $2.9 Billion in Three Months—Here is Why

AI Startups Raised $2.9 Billion in Three Months—Here is Why


OpenAI not too long ago secured $6.6 billion in funding at a valuation of $157 billion, but it surely’s removed from the one AI firm with excessive fundraising potential. Traders poured $2.9 billion from July to September (Q3) of 2024 into the most recent U.S.-based AI startups, per PitchBook knowledge.

The three startups within the U.S. that obtained among the most funding had been software program growth AI startup Magic, enterprise ChatGPT startup Glean, and AI doc search startup Hebbia, per TechCrunch. The three raised $320 million, $260 million, and $130 million respectively within the third quarter.

Magic is creating AI that may write code and Glean is engaged on an AI search app for companies. Hebbia focuses on AI brokers for finance, legislation, and massive corporations.

An earlier PitchBook report from August reveals that investor curiosity in AI is long-term and extends past the final quarter. The report confirmed that AI comprised 41% of U.S. VC offers within the first half of 2024, with $38.6 billion of the $93.4 billion complete in VC offers going to AI startups.

Associated: AI Startups Raised $50 Billion Final 12 months, However Some Traders Are Beginning to Move — Here is Why

Going again additional to final yr, AI was one of many few industries with the most progress in unicorn startups, or companies with a valuation over $1 billion. In an in any other case powerful fundraising yr, the variety of AI unicorns grew by 22.9%.

Even because it presents alternatives, AI carries its personal distinctive set of challenges. For one, the price of creating an AI mannequin is excessive. Anthropic CEO Dario Amodei acknowledged in July that it could take $10 billion to coach AI “higher than most people at most issues.” He estimated that AI corporations would attain that time throughout the subsequent three years and that now it takes about $100 million to coach an AI mannequin.

AI additionally has a hefty electrical invoice. Microsoft, Google, and different huge tech corporations are turning to nuclear energy as a supply of carbon-free power; AI helped improve Google’s greenhouse emissions by 48% inside 4 years.

Nonetheless, AI stays an space of excessive curiosity amongst founders. 156 out of the 208 startups accepted to the summer time class of Y Combinator, an acclaimed startup accelerator, targeted on AI.

Associated: Y Combinator Helped Launch Reddit, Airbnb and Dropbox. Here is What I Realized From Its Free Startup Faculty.

One startup founder not affiliated with Y Combinator, Sahil Agarwal of AI security startup Enkrypt AI, talked to Entrepreneur earlier this yr about the hazards and alternatives AI poses.

“What ChatGPT did is it made AI actual for everybody,” he stated.

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