Artificial intelligence start-ups raised more than $50bn in funding in 2022 but even that was a slow year, according to a new analysis which reveals an $89bn (41%) fall in venture capital investment in the sector during the past 12 months.
While the stampede for the likes of ChatGPT shows no sign of abating, figures from data and analytics company GlobalData show that, in the AI space, VC funding deal volume and value declined in 2022 compared to the previous year.
A total of 3,198 AI start-ups received $52.1bn funding across 3,396 VC funding deals during 2022, but the year was still subdued for VC funding activity across all sectors and the AI space felt the brunt of a dent in investor sentiments.
GlobalData lead analyst Aurojyoti Bose said: “The number of VC funding deals announced in the AI space globally declined by 4% in 2022 compared to the previous year, whereas the corresponding deals value was down by a massive 41.8%.”
AI deal volume experienced a fluctuating quarter-on quarter trend throughout 2021 and 2022. Meanwhile, deal value declined for the six straight quarter in Q3 2022. However, there was a rebound in both VC funding deals volume and value in Q4 2022.
Some of the notable VC deals announced in the AI space during 2022 include $1.5bn fundraising by Anduril Industries, $580m raised by Anthropic, and $500m fundraising by Black Sesame Intelligent Technology.
However, to put this into context, in January this year – just two months after ChatGPT was released – parent company OpenAI raised the possibility of selling existing shares in a tender offer that would place the value of the company at about $29bn.
Bose concluded: “The subdued VC funding activity in the AI space seems to be for short-term while long-term prospects are likely to be promising and the rebound in both deals volume and value in Q4 2022 could be seen as an indication of it.”
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