Despite these declines, $100M+ mega-rounds comprised 51% of total CVC-backed funding in Q3’24, a notable increase from a quarterly average of 37% in 2023. Meanwhile, two-thirds of CVC deals this year have gone to early-stage companies, highlighting a strategic shift toward more emerging opportunities, especially in AI.

Based on our deep dive in the full report, here is the TL;DR on the state of CVC:

• ​​Global CVC-backed funding drops 5% to $15.7B in Q3’24. Nevertheless, that figure is still the second-highest quarterly level since the beginning of 2023. Meanwhile, a 10% QoQ decline to 773 deals — the lowest total since 2018 — suggests that CVCs are increasingly selective, similar to the wider venture market.

• The average CVC-backed deal size has increased 31% so far this year to $27.1M, highlighting investors’ willingness to take risks when they find the right opportunity. However, the median deal size remains the same as last year at $8M, signaling that investors are only more aggressive regarding the largest deals.

• Funding to CVC-backed mega-rounds (deals worth $100M+) represents 51% of total funding in Q3’24. This percentage — roughly in line with the first 2 quarters of 2024 — is up significantly from an average of 37% in 2023, further suggesting that investors are currently willing to make large bets when they decide to invest.
• Early-stage rounds represent 66% of total CVC deal share this year, the highest level in over a decade. CVCs are increasingly focused on early-stage startups, likely driven by the record levels of AI funding and the fact that, across investor types, 72% of deals to AI companies this year are early-stage.

• CVC-backed funding in the US ticks up to $10.5B. Among major global regions, the US continued to lead in CVC-backed funding in Q3’24, followed by Europe at $2.6B and Asia at $1.3B. Within the US, defense tech provider Anduril raised the largest CVC-backed deal with its $1.5B Series F round (CVC investors include Franklin Venture Partners), followed by AI chip developer Groq with its $640M Series D round (backed by Samsung Catalyst).

MORE VENTURE RESEARCH FROM CB INSIGHTS

• State of CVC Q2’24 Report
• State of Venture Q3’24 Report
• State of Fintech Q3’24 Report
• State of Digital Health Q3’24 Report

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While AI deals in Q3’24 included massive $1B+ rounds to defense tech provider Anduril and AI lab Safe Superintelligence, global AI funding actually dropped by 29% QoQ. This was driven by a 77% decline in funding from $1B+ AI rounds QoQ.

Based on our deep dive in the full report, here is the TL;DR on the state of AI:

• Global AI deal count climbs 24% QoQ to reach 1,245 — its highest quarterly level since peaking in Q1’22. This bucked the trend in overall venture deals (-10% QoQ), signaling that investor interest in AI remains strong despite the broader cooling in venture markets. AI funding, on the other hand, fell by 29% QoQ to $16.8B, driven by a 77% decline in funding from $1B+ AI rounds QoQ. 

• The average AI deal size is $23.5M in 2024 so far — up 28% vs. $18.4M in full-year 2023. This upward trend has been influenced by a rise in massive $1B+ deals, with AI startups drawing 9 of these deals in 2024 so far vs. 4 in full-year 2023. Top $1B+ rounds in 2024 YTD include: 
  • xAI — $6B Series B at a $24B valuation
  • Anthropic — $2.8B Series D at an $18.4B valuation
  • Anduril — $1.5B Series F at a $14B valuation
  • G42 — $1.5B investment from Microsoft
  • CoreWeave — $1.1B Series C at a $19B valuation

These deals aren’t solely responsible for pushing up the average — the median AI deal size is up 9% in 2024 so far.

• AI unicorn births more than double QoQ to reach 13 — 54% of the broader venture total in Q3’24. Generative AI continues to be a key theme for new unicorns (private companies reaching $1B+ valuations). More than half of the AI unicorns born in Q3’24 are genAI startups, and they are working across a variety of areas — including AI for 3D environments (World Labs), code generation (Codeium), and legal workflow automation (Harvey).

Among new genAI unicorns in Q3’24, Safe Superintelligence — co-founded by OpenAI co-founder Ilya Sutskever — landed the most sizable valuation. The AI lab was valued at $5B after raising a $1B Series A round in September 2024.

• AI M&A exits fall by 48% QoQ to hit 62 in Q3’24. The deals that did occur showcase how enterprises are strategically scooping up AI startups to improve their offerings and maintain a competitive edge. For example, the largest AI M&A deal in Q3’24 was AMD’s acquisition of AI lab Silo AI, which could help the semiconductor company enhance the development and deployment of AI models on its hardware. Meanwhile, Salesforce picked up unstructured data management startup Zoomin to support its AI agent offerings.

• Among major global regions, the US continues to lead in AI funding and deals. AI startups based in the US drew $11.4B across 566 deals in Q3’24, accounting for over two-thirds of global AI funding and 45% of global AI deals. Within the US, Silicon Valley still dominates AI funding and deals, but other metros are gaining ground. In Q3’24, Los Angeles and New York saw their AI deal counts rise QoQ while Silicon Valley watched its count drop for the second quarter straight.

ADDITIONAL AI RESEARCH FROM CB INSIGHTS:

• State of AI Q2’24 Report
• State of Venture Q3’24 Report
• Game Changers 2025: 9 technologies that will change the world
• The Multi-Agent AI Outlook: Here’s what you need to know about the next major development in genAI
• Analyzing a16z’s AI investment strategy: Where the firm sees opportunity amid the genAI rush
• The AI computing hardware market map

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Over the last month or so, JP Morgan has purchased 2 content/media assets. In early September 2021, it bought The Infatuation, a publisher that offers reviews and recommendations on restaurants in 50 cities across the USA and internationally. 

And later in the month, it bought Frank, an online portal with content and tools that help students research and apply for financial aid. (Note: In April 2023, Frank was accused of defrauding JPMorgan, inflating the number of Frank customers before the sale.)

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The post Stripe, HubSpot, And JP Morgan Are Buying Audiences. Why Acquiring Media Companies And Communities Is About To Explode appeared first on CB Insights Research.

It’s driving value in both customer-facing experiences and back-end operations. This includes tackling challenges specific to digital retail, like personalizing product merchandising and forecasting inventory needs. 

While customer service has been the dominant focus so far, more advanced use cases are on the horizon. These include multi-application orchestration through solutions like composable AI, which helps synchronize genAI tools across an organization’s e-commerce tech stack. 

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In some ways venture has become less dramatic. The period of steep decline in funding that followed the dizzying heights of 2021 has given way to relatively moderate quarterly variations.

But even in a more sober fundraising environment, excitement over AI has become a major driving force for investors. One in every 3 VC dollars now goes to the tech. Silicon Valley, a major AI hub, is tightening its hold on investor cash. AI startups are exiting years faster than those working on other technologies.

As interest rates fall and the appetite for riskier assets increases, expect AI startups to be top of mind for an increasing number of investors in the months ahead.

Download the full report to access comprehensive data and charts on the evolving state of VC across sectors, geographies, and more.

Below, we cover key shifts in the landscape, including:

1. Quarterly declines in global VC funding and deals
2. AI startups grab 1 in 3 VC dollars
3. Performance from recent tech IPOs
4. Silicon Valley is only getting stronger
5. New unicorns remain rare
6. The US claims the bulk of AI innovation
7. How global VC stacks up against economic output
8. 76% of top deals go to B2B startups
9. AI startups exit 6 years sooner than the rest of tech

Let’s dive in.

Topline figures paint a sobering picture for venture, as both global funding and deals ticked down quarter-over-quarter (QoQ). The quarterly levels place Q3’24 on par with where VC was in 2016/2017.

However, while deal volume has progressively declined, the size of deals that do happen has grown. In 2024 so far, the average deal clocks in at $13.9M (up from $12M in full-year 2023), while the median is worth $3M (up from 2023’s $2.5M). 

The more cautious investment environment is likely driving a flight to quality as selective investors isolate the most promising ventures.

AI startups are capturing nearly a third (31%) of all venture funding right now — the second-highest share on record, following Q2’s 35%.

Within AI, a company’s age and stage don’t always correlate to the size of financing rounds. One of the largest rounds in Q3’24, for instance, was a mammoth $1B deal to Safe Superintelligence (SSI) — an early-stage startup founded in June by OpenAI co-founder Ilya Sutskever. The company has just 10 employees.

SSI’s deal is the 9th $1B+ AI equity round this year. Given their willingness to participate in such large rounds to so many companies, investors appear confident that a new tech giant will emerge from the space — and apparently have FOMO.

Yet despite investors’ bullishness, many of today’s fledgling AI startups will struggle to live up to lofty expectations, and some will ultimately fail. Even AI giants like OpenAI face the daunting task of keeping costs in control: the AI leader’s losses are expected to amount to $5B this year. 

The AI boom is also giving recent public debuts a boost. 

We analyzed 15 of the companies with the largest tech IPOs since 2022 to see whether they’ve gained or lost value since they filed to go public IPOs. The majority (10 out of 15) have either held steady or gained value as public players — a positive indicator for tech IPOs more broadly, which until recently were getting beaten down badly in the public markets. The fact that startups are able to maintain and even gain value as public companies will likely draw out other IPO-ready companies.

And AI is an important factor driving gains for several of these companies. For instance:

• Arm’s value has nearly tripled since it debuted late last year. The chip designer is a leader in CPUs for AI computing hardware, including providing the architecture for AI chip firms like Nvidia.
• Tempus is deploying AI across its precision medicine offerings, which has helped buoy its value by 31% since its IPO filing. (It legally changed its name from Tempus Labs to Tempus AI in early 2023.)
• Like Arm, Astera Labs, which offers AI infrastructure & connectivity hardware, has benefited from the swell in widespread adoption of AI. Its value has grown 45% since filing in March 2024. 

It’s not universal — enterprise AI firm 4Paradigm, for instance, has seen its value slashed by over half since debuting. But this could be due more to geopolitical forces, as China-based 4Paradigm has faced an uphill battle in sustaining investor interest because of US restrictions. (4Paradigm was placed on a US export control list in early 2023.) 

Customers: explore data behind these 15 IPOs

Another result of the AI explosion: Cash is concentrating in Silicon Valley, home to over a third of the US-based AI startups. In fact, the metro’s share of US venture funding — across sectors — has climbed to a recent high of 41% this year.

In Q3’24, Silicon Valley-based startups raised $10.5B — more than 2.5x that of New York ($3.9B), the second-ranked metro. LA and Boston follow, with $2.9B and $2.8B, respectively. 

Notably, deal activity in Silicon Valley remains overwhelmingly early-stage — meaning it’s not just a handful of more established startups raising massive rounds. More than two-thirds of Silicon Valley’s deals this year are at the seed or Series A stages.

See every AI company in Silicon Valley

Newly minted billion-dollar startups remain few and far between. Q3’24 saw 24 startups reach that mark — a noticeable bump from the previous quarter’s 16, though a fraction of what we saw during the tech boom of 2021 and early 2022. 

Valuations remain pressured at the later stages of investment, with many of the unicorns minted in years gone by likely worth less than $1B in reality. On the other hand, valuations are showing strength at the earlier stages. Among seed-stage startups, the median valuation for deals this year is $13.5M — the highest annual level on record.

There are a few common themes among the latest batch of new unicorns:

• AI is minting more unicorns than any other sector. More than half of the new unicorns in Q3’24 are AI companies. Among these, several are working to bring greater spatial awareness to AI systems, from Skild AI’s intelligent humanoid robotics to World Labs’ 3D world-building tools. Others are developing enterprise AI agents & copilots, like Harvey in the legal domain and Codeium in software engineering.
• India’s startups are climbing the ranks. The country contributed 3 of Q3’24’s new unicorns: Ather Energy, MoneyView, and Rapido. India ranks third globally for total unicorns after the US and China, and it had a strong funding quarter in Q3’24, with startups raising $4B — up 29% QoQ and 111% YoY.
• a16z and Sequoia are the most active investors in backing new unicorns. The investors each backed 4 of Q3’24’s freshly minted $1B+ companies. Andreessen Horowitz invested in Saronic Technologies, World Labs, Story Protocol, and Safe Superintelligence; while Sequoia Capital backed Skild AI, Harvey, Chainguard, and Safe Superintelligence.

See the 24 new unicorns with this search

CB Insights tracks over 15,000 AI startups globally. And while 99 countries and regions around the world have at least 1 AI startup, the US is the undisputed leader in AI startup activity — and by a substantial margin. 

43% of all AI startups are based in the country. The distant No. 2 and No. 3 countries are China (9% of AI startups) and the UK (7%). 

View 15,000+ AI startups in the Expert Collection

While the US has long dominated the global venture scene when it comes to absolute funding and deal activity, several countries rank above the US in terms of the ratio of venture funding to GDP: the United Arab Emirates, Israel, and Singapore. 

These 3 countries pace ahead of the US in terms of VC as a proportion of overall economic activity, suggesting they are punching above their weight in terms of fostering startup activity. 

For instance, UAE-based startups have raised over $3B in funding over the last year (since 10/1/2023), and the country’s 2023 GDP came in at $504B. That represents $1 in VC to $158 in GDP (1/158) — a stronger ratio than any other country with at least $1B in annual venture funding.

Activity in the region has recently been fueled by AI firm G42, which raised a $1.5B round from Microsoft in April. (As part of the deal, G42 will use Microsoft’s Azure cloud offering, and Microsoft will also gain access to G42’s data centers.)

Israel and Singapore hold the No. 2 and 3 spots, with venture funding to GDP ratios of 1/166 and 1/198, respectively. 

Explore top Q3 venture deals for the UAE, Israel, & Singapore

Right now, the venture capital industry is all in on B2B startups. Among the 100 largest deals in Q3’24, three-fourths went to startups that use a B2B business model (either exclusively or in combination with other models like B2C or B2G). 

The B2B distribution model — particularly at the enterprise level — has gained appeal in recent years as a potentially more stable, recurring source of revenue for startups, especially during periods of volatile consumer spending.

See the top B2B venture deals in Q3’24

The buzz around AI is translating to faster exit velocity for startups in the space. Breaking down all the exits that have taken place this year, it’s clear AI startups exit at a much faster rate — 6 years faster, to be exact. It takes the median AI company just 7 years to exit from the year it was founded, compared to 13 years for non-AI companies.

While this trend holds true for recent AI IPOs, it’s most commonly seen among M&A deals, which represent the vast majority of AI exits this year.

Corporations are among the top acquirers of AI startups, with many looking to gain an edge by rapidly adding novel AI tools to their product suites.

• Nvidia has acquired 3 AI startups this year: Deci and Run:ai, both in April; and OctoAI, just last week. All 3 operate at the infrastructure layer of AI development and signal Nvidia’s ambitions to expand across the AI software stack.
• Zendesk has acquired 2 customer service-focused players — Ultimate and Klaus — as it builds out its own AI agent offering to automate customer interactions.
• Salesforce has similarly pledged to go all in on AI agents. To this end, it acquired 2 AI startups last month: Tenyx and Zoomin.

Another driving factor is “acqui-hires,” where an acquirer purchases a startup primarily for its talent. We’ve seen this among some of the youngest AI startups to be acquired. For instance, SydeLabs and Laiyer, both founded in 2023, were acquired by Protect AI this year. In both cases, Protect AI absorbed the startups’ teams.

See the AI startups most likely to get acquired next

The post State of Venture Q3’24 Report appeared first on CB Insights Research.

The question is certainly top of mind for corporations getting to grips with emerging technology like generative AI — the answer could help identify future competitors, partners, new markets, or acquisition targets.  

Using CB Insights’ proprietary data and metrics — including Exit Probability, Commercial Maturity, Mosaic, headcount, patents, and funding — we identified the 52 emerging players our data says are most likely to have an outsized influence in the next 5–10 years and have a strong exit. 

Download the report to see:

• The full list of Future Tech Hotshots
• Key themes and industry analysis
• Methodology

MORE TOP COMPANY LISTS FROM CB INSIGHTS:

• Insurtech 50: The most promising insurtech startups of 2024
• AI 100: The most promising artificial intelligence startups of 2024
• The Digital Health 50: The most promising digital health companies of 2023
• Fintech 100: The most promising fintech startups of 2023

The post Future Tech Hotshots: 52 emerging tech startups that will have big, successful exits appeared first on CB Insights Research.

In 2024 so far, a16z has backed more than 20 AI startups working within disruptive categories. For example, this year, it has invested in several AI-driven copilots and agents designed to automate key workflows in big industries like healthcare and finance. It has also turned its attention to multimedia generation startups expediting the creation of a wide variety of content, from images to videos to audio.

While championing AI’s advancement, the firm also acknowledges associated risks — its founders are proponents of open-source models, arguing that their transparency and accessibility will help ensure that AI is developed in a secure and ethical way. So far this year, the two largest a16z-backed AI deals have gone to open-source large language model (LLM) developers xAI and Mistral AI.

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Massive rounds to AI companies were a key driver of the funding growth, with 3 of the 5 largest CVC-backed deals this quarter going to AI infrastructure players Scale ($1B), Mistral AI ($502M), and Cohere ($450M).

Based on our 124-page report, here is the TL;DR on the state of CVC:

• ​​Global CVC-backed funding climbs to $15.6B in Q2’24. Over half ($8.4B) of this funding came from $100M+ mega-rounds. Meanwhile, global deal volume declined by 12% QoQ to 782. This drop was particularly pronounced in Asia, which saw a 24% drop in deals QoQ.
• This year, the average CVC-backed deal size is $26.6M, up 27% from $20.9M in full-year 2023. The increase is due in part to billion-dollar deals to startups like Scale ($1B Series F, backed by the CVC arms of Intel, AMD, Cisco, and ServiceNow) and Wiz ($1B Series E, backed by Salesforce Ventures).
• CVC-backed funding to digital health startups falls 57% QoQ to 0.6B, its lowest point since Q4’17. Retail tech and fintech saw similar decreases, with funding down 52% and 8% QoQ, respectively. Companies not explicitly focused on AI face challenges raising funds in the weakened venture market.

• Quarterly CVC-backed funding in China slips to $0.2B, a 60% QoQ decrease. Deal volume also fell 24% QoQ to 59, its lowest level since 2015. China’s tech market has faced significant challenges, including rising macroeconomic concerns, escalating geopolitical tensions, and a strict regulatory environment.

The post State of CVC Q2’24 Report appeared first on CB Insights Research.

Meanwhile, overall AI deal volume broke its extended freefall in Q2’24, rising by 16% QoQ to reach 948. This bucked the trend in venture deals more broadly (-7% QoQ).

Based on our deep dive in the full report, here is the TL;DR on the state of AI:

• Global AI funding increases 59% QoQ to $23.2B in Q2’24 — the highest quarterly level on record, exceeding even the level seen during 2021’s venture boom. The jump was driven by a handful of $1B+ rounds and outpaced the growth in broader venture funding (+8%). Meanwhile, AI deal count climbed by 16% QoQ to reach 948, bucking the trend in venture deals more broadly (-7% QoQ).

• Average AI deal size is $28.9M in 2024 so far — up 55% vs. $18.6M in full-year 2023. A relatively small number of players have had an outsized impact on this upward trend, raising massive $1B+ deals in Q2’24: 
  • xAI — $6B Series B at a $24B valuation
  • G42 — $1.5B investment from Microsoft 
  • CoreWeave — $1.1B Series C at a $19B valuation
  • Wayve — $1.05B Series C from Softbank, Microsoft, and Nvidia
  • Scale — $1B Series F at a $13.8B valuation

Meanwhile, the median AI deal size is up 25% in 2024 so far.

• AI unicorn births remain steady at 6 QoQ in Q2’24. Generative AI was a key theme for new unicorns (private companies reaching $1B+ valuations). Some of these companies, like xAI, are focused on generative AI infrastructure. Others are primarily working on generative AI applications, like Perplexity (search) and Cognition (coding).

Among new AI unicorns in Q2’24, xAI landed the most sizable valuation. The company was valued at $24B after raising $6B in Series B funding, which it plans to use to bring its first products to market.

• AI companies raise 32 mega-rounds (deals worth $100M+) in Q2’24, marking a 28% increase QoQ. Meanwhile, funding from AI mega-round deals climbed 74% QoQ in Q2’24. This was largely driven by US mega-round deals, which collectively amounted to $10.8B — 67% of AI mega-round funding in Q2.
• Among major global regions, the US continues to lead in AI funding and deals. AI startups based in the US drew $15.2B across 476 deals in Q2’24. This equates to 66% of the global AI funding total and 50% of the global deal total in Q2.

The post State of AI Q2’24 Report appeared first on CB Insights Research.

Based on our deep dive below, here is the TL;DR on the state of venture:

1. Venture funding climbs for a second straight quarter, reaching $65.7B, up 8% quarter-over-quarter (QoQ). However, while funding gained momentum, deals slid for the ninth quarter in a row to 6,230. Global deal volume is now less than half of what it was at its peak in Q1’22.
2. At $14.4M, the average deal size is up 17% this year so far vs. 2023. Even in a more cautious investing environment, the deals that do happen have ballooned in size as investors put more behind select startups. 
3. AI startups are dominating global funding, capturing 35% in Q2’24. This is the highest quarterly share on record. AI startups drew $23.2B in Q2’24 — up 59% QoQ — driven by mammoth $1B+ deals to Elon Musk’s xAI as well as Scale, CoreWeave, and others. 
4. The US is attracting a greater portion of exit activity, with exit share rising 4 percentage points QoQ to 39%. This represents its highest share in 2 years. Top US-based exits in Q2’24 included IPOs from Tempus and Rubrik — both valued at over $5B — as well as Hyundai’s acquisition of Motional priced at $4.1B.
5. SOSV is the most active venture investor, backing 35 companies in Q2’24. It’s followed by Andreessen Horowitz (33 companies), General Catalyst (31 companies), and Lightspeed Venture Partners (28).
6. Fintech funding rebounds 19% QoQ to hit $8.9B — a 5-quarter high — led by $600M+ rounds to Stripe and AlphaSense. But it was a different story for the retail tech and digital health sectors: retail tech funding was stagnant from Q1 to Q2, while digital health funding slipped by 26%.
7. Quarterly funding to startups in Asia falls below $10B for the first time since 2014. The drop was especially severe in China, where some international investors have pulled back or retreated altogether amid rising geopolitical tensions. Meanwhile, the US and Europe — the two largest regions for venture investment — each saw funding grow by double-digit percentages in Q2’24.

Venture funding ticked up for a second consecutive quarter, reaching $65.7B in Q2’24. Nearly half of this funding (47%) came from mega-rounds (deals worth $100M+). xAI’s $6B round alone represented nearly one-tenth of the global total and helped prevent funding from declining QoQ.

Despite the strong showing, deal volume slipped for a ninth straight quarter — sinking 7% to 6,230 — as investors remain cautious in the less exuberant market. The US, Europe, and Asia all saw deal count decrease QoQ, while it grew slightly across Canada, LatAm, Africa, and Oceania.

With deals down and funding up, the average deal size has climbed this year, pacing at $14.4M — up 17% compared to full-year 2023. Notably, it’s not just a few massive deals that are pulling that figure up: the median deal size has also grown from $2.5M to $3M over the same period. 

Among investment stages, the median deal size has increased across early- and mid-stage rounds, while it has fallen slightly at the late stage.

One factor more than any other is driving gains in the venture market right now, and that’s AI. Startups developing AI solutions raised $23.2B in Q2’24 — accounting for 35% of the global total, the highest share ever recorded. This share has been trending up for several years now, especially since the arrival of OpenAI’s ChatGPT in late 2022.

Leading the pack among AI startups, Elon Musk’s xAI outfit raised a whopping $6B round in Q2’24. The 1-year-old company, now valued at $24B, had no trouble finding investors, who believe xAI will gain a competitive edge through integration with Musk’s network of companies (and their data). For instance, Tesla could use xAI’s latest multimodal AI model, which includes vision capabilities, to bring more advanced perception to its Optimus humanoid.

The Funding Insights from xAI’s CB Insights profile point to synergies between xAI and Musk’s other companies, like Tesla.

Other top AI rounds in Q2’24 went to:

• G42 — $1.5B investment from Microsoft
• CoreWeave — $1.1B Series C at a $19B valuation
• Wayve — $1.05B Series C from SoftBank, Nvidia, and Microsoft
• Scale — $1B Series F led by Accel, with backing from corporates including AMD, Amazon, Intel, and Nvidia

Customers can explore thousands of AI startups across industries and technologies in the CB Insights AI Expert Collection.

In Q2’24, the US saw 39% of all exits, which included both IPOs and M&A transactions. The figure represents an increase of 4 percentage points QoQ and puts the US in the No. 1 spot globally, tied with Europe.

Notably, US IPOs are gaining some strength, with Q2 seeing blockbuster debuts from Tempus (valued at $6.1B) and Rubrik ($5.6B). We predicted both companies would go public in our Tech IPO Pipeline report, published in late 2023. 

Go deeper with CB Insights buyer interviews for Tempus and Rubrik to see what their customers are saying.

Meanwhile, the US venture market’s top M&A deal went to Motional, an autonomous driving startup founded as a joint venture between Hyundai and Aptiv. Hyundai took a majority stake in the company at a $4.1B valuation. Per the Funding Insights on Motional’s CB Insights profile, Hyundai and Motional are co-developing a robotaxi service with a target release of 2024.

The Acquisition Insights from Hyundai’s CB Insights profile break down the structure and goals of the Motional deal.

Around the world, the most active venture investor right now is SOSV. The firm, which primarily backs early-stage startups, invested in 35 unique companies in Q2’24, placing it ahead of a16z (33 companies), General Catalyst (31), and Lightspeed (28). 

Customers can use this CB Insights platform search to see SOSV’s top portfolio companies ranked by Mosaic score — which measures a private company’s health — alongside data cuts like commercial maturity, headcount growth, and more.

Among industry sectors, fintech saw funding grow the most, watching it rise 19% QoQ to reach $8.9B. This marks a rebound for the sector vs. Q1’24. Top fintech deals in the quarter went to payments leader Stripe and market intelligence firm AlphaSense. 

The retail tech and digital health sectors were worse off than fintech. Retail tech funding was roughly stagnant QoQ, while digital health funding plummeted to below $3B — its second-lowest quarterly level since 2016.

Among major global regions, the US and Europe outpaced the market as a whole for funding growth in Q2’24. 

Asia, on the other hand, saw its funding fall 13% QoQ to $9.7B. The decline was most pronounced in China, where dollars tumbled more than 50% to $2.2B, whereas India, Singapore, and Japan all experienced funding growth QoQ. 

The top two equity deals in the region went to United Arab Emirates’ G42 and India-based Zepto.

The post State of Venture Q2’24 Report appeared first on CB Insights Research.

Hundreds of startups — and billions in funding — have flooded the market since then, with equity deals to generative AI startups increasing by over 60% in 2023 compared to the previous year.

Startups are using the tech to create new proteins and drugs, power the next generation of search engines, ship code faster, build next-gen gaming experiences, and much more.

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Massive rounds to players like generative AI startup Anthropic were key drivers behind the jump, as overall AI deal volume dipped for the fourth straight quarter in Q1’24. 

Here is the TL;DR on the state of AI:

• Global AI funding reaches $13.1B. AI funding increased 24% QoQ to reach $13.1B — its highest quarterly level since Q1’23. This outpaced the growth in broader venture funding (+11%). Meanwhile, AI deals slipped for the fourth consecutive quarter, hitting their lowest quarterly count since 2018 (739 deals). This drop was particularly pronounced in Asia, which saw a 30% drop in deals QoQ.
  

• Average deal size YTD in AI is $23.1M, up 21% vs. $19.1M in full-year 2023. A couple of genAI infrastructure players have had an outsized impact on this upward trend, raising massive $1B+ deals: Anthropic ($2.8B Series D) and Moonshot AI ($1B Series B). Notably, Anthropic raised an additional deal worth $750M in Q1’24, bringing its total funding for the quarter to $3.5B.
• AI unicorn births remain steady at 6 QoQ in Q1’24. Three of these new unicorns are generative AI model developers: Moonshot AI, Together AI, and Krutrim all reached $1B+ valuations in Q1’24.
• AI M&A exits drop 36% in Q1’24. There were 69 M&A deals for AI companies in Q1’24, marking a 36% decrease from Q4’23. Amid the downturn, Europe saw its share of broader global exits rise by 12 percentage points QoQ, while Asia experienced a 15-point drop. Meanwhile, the US’ share remained steady at 41%.
• US AI funding rises 52% QoQ to reach $9.3B. Asia was the only other major global region to see a funding increase (+6%) in Q1’24. Funding totals for both regions were heavily buoyed by the $1B+ rounds to genAI infrastructure startups Anthropic (US) and Moonshot AI (China).

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Highlights from the 2024 cohort include:

• 16 countries represented, from the US to France to South Africa
• 30+ categories of solutions, from foundation models to humanoids
• 68% early-stage startups building virtual worlds, autonomous factories, language models for under-represented languages, and more
• 600+ business relationships since 2016 with industry leaders like Toyota, Netflix, and the World Bank

Our research team picked winning companies based on CB Insights datasets including deal activity, industry partnerships, team strength, investor strength, patent activity, and proprietary Mosaic Scores. We also analyzed CB Insights’ exclusive interviews with software buyers and dug into Analyst Briefings submitted directly to us by startups.

Please click to enlarge.

CB Insights customers can interact with the entire AI 100 list here and view a detailed category breakdown using the Expert Collection.

2024 AI 100 COHORT HIGHLIGHTS

Funding distribution

The cohort has raised over $28B across 240+ equity deals since 2020 (as of 3/22/24). OpenAI has raised over 40% of that total, with $12B. Meanwhile, 25% of the winning companies have raised less than $10M, with some not having raised any venture funding.   

Just over two-thirds (68%) of winning companies are in the early stages of fundraising (seed/angel and Series A) or have yet to raise outside equity.

Valuation trends

This year’s list includes 19 unicorns with a $1B+ valuation.

Meanwhile, Sakana AI — founded by one of the authors of the seminal Google research paper on Transformers — has the highest valuation per employee, at $67M. (It had just 3 employees when it earned its $200M valuation in early 2024.) Sakana is working on new “nature-inspired” AI architectures and recently released 3 Japanese-language models.

Revenue generation

The AI 100 includes a mix of companies at different stages of maturity, product development, and revenue. 

Hugging Face, an AI infrastructure platform focused on open-source development, has one of the highest revenue multiples at 150x ($30M in 2023 revenue at a $4.5B valuation). It’s followed by Perplexity, which is developing an alternative to traditional search engines, at 65x (based on a 2023 valuation of $520M and $8M in 2024 ARR).

Midjourney, an image generation platform that has not raised any outside equity, is one of the leading AI 100 winners by revenue with $200M in ARR.

Global reach 

A total of 31 winning companies in this year’s cohort are headquartered outside the United States, across 15 other countries. This includes South Africa-based Lelapa AI — which is developing language processing tools for sub-Saharan African languages like Afrikaans, isiZulu, and Sesotho — and Canada-based Ideogram, which is tackling the problem of generating images with legible text. 

Europe-based startups account for 19% of the list, including companies headquartered in the United Kingdom, France, and Germany.

Categories & applications 

Over one-third of this year’s winners are focused on building core AI infrastructure, from foundation models to AI chips to AI development platforms. 

A total of 30 vendors are focused on horizontal (i.e., cross-industry) solutions like coding automation, creator tools, and search, while 34 companies are specializing in verticals like gaming, healthcare, education, and manufacturing.

A handful of winners are building niche applications where the use of AI is not yet commonplace. These include:

• Atomic Industries, which is developing AI for tool and die making in manufacturing and is backed by the venture arms of Porsche, Yamaha, and Toyota
• Rosebud AI, a text-to-game generation startup backed by OpenAI co-founders Ilya Sutskever and Andrej Karpathy, as well as Khosla Ventures
• Flawless AI, a startup developing lip-synced video dubbing for the film industry

CB Insights customers can get real-time updates on the AI 100 winners using this home feed.

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The days of fairy-tale valuations are long gone. Last year saw just 71 new unicorns minted — one-eighth as many as in 2021. 

But investors and startups have some reason for optimism. New unicorn births rebounded in Q4’23, jumping quarter-over-quarter from 14 to 23. And generative AI companies are showing they can attain unicorn status at a breakneck pace, as we explore below.

Read on to see every unicorn globally, as well as our breakdown of key industry and geography trends.

CB Insights customers can dive deeper into unicorn data using the Unicorns Expert Collection, as well as hear directly from unicorns’ customers here. 

Market map

Collectively, the world’s unicorns are worth $3.8T — roughly comparable to the GDP of Germany.

The market map below shows all 1,229 unicorns, grouped by industry. 

Categories are not mutually exclusive and companies are sorted by primary use case.

Unicorns by industry

Enterprise tech is the most highly represented industry, with 31% of all unicorns. The enterprise tech category includes tech companies that target general B2B use cases or sell into a wide range of industries.

Given the breadth of this group, we’ve broken it down further into segments like HR tech and cybersecurity, which each account for 5% of all unicorns.

The financial services industry takes the second spot with an 18% share, followed by consumer & retail with 17%.

The enterprise tech group has seen especially strong growth recently. Roughly half of the unicorns born in the last 6 months are in this category, propelled by generative AI newcomers like China’s 01.AI ($1B valuation), India’s Krutrim ($1B), and ElevenLabs ($1.1B) out of the US. All 3 were founded in the last 2 years.

Meanwhile, the unicorn count in most other industries has been stagnant or even declined. Healthcare & life sciences, for instance, has seen its total unicorn count shrink from 122 to 117 since our last update in October 2023, driven by a mix of startup exits, down rounds, and shutdowns in digital health.

Meanwhile, recent newcomers to the unicorn club include:

• Liquid Death ($1.4B valuation). The non-alcoholic beverage company, known for its heavy-metal branding, has nearly 8M followers on social platforms and doubled its retail sales YoY in 2023.  
• Mews ($1.2B). Mews, which develops SaaS tools for the hospitality industry, is seeing demand grow as the tourism industry makes a post-Covid comeback.
• Figure ($2.7B). The venture arms of Amazon, Intel, Nvidia, Microsoft, OpenAI, and Samsung all backed Figure’s Series B round last month, as the tech incumbents have been racing to get involved in the humanoid robotics space.

Global distribution of unicorns

Globally, a total of 53 countries and regions are represented in the unicorn club.

The US is home to more than half (53%) of all unicorns. Within the US, two industries have a higher share relative to global averages: enterprise tech (39% of US unicorns) and healthcare & life sciences (13% of US unicorns).

The US is followed by China (14% of global unicorns). China’s unicorns are especially concentrated in the industrials and consumer & retail spaces, which represent 31% and 30% of the country’s unicorns, respectively.

Time to reach unicorn status

On average, it took just over 7 years for today’s unicorns to reach the billion-dollar mark from when they were founded. This is relatively stable across industries — ranging from 6.6 years for financial services to 7.7 years for healthcare — until you zoom in on generative AI startups.

There are 34 generative AI unicorns, and they’ve collectively averaged just 3.9 years to hit unicorn status — 45% less than all other unicorns. 

In some cases, genAI startups are reaching that mark in under a year. For instance, Mistral AI, a Paris-based LLM developer, was founded in April 2023. Just 8 months later, in December 2023, it grabbed a $2B valuation as part of its Series A round.

CB Insights customers can explore all 34 generative AI unicorns with this CB Insights platform advanced search.

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While the sportswear leader’s focus on direct sales channels helped it amass a sizable digital loyalty program, it wasn’t enough to compensate for the loss of third-party retail customers and the cost of running its own D2C business.

Now, the brand is developing cost-cutting plans, returning to e-commerce marketplaces, and working to grow its NikePlus loyalty program — where members spend significantly more than the average customer.

Want to see more research? Join a demo of the CB Insights platform.

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Startup valuations jumped for AI companies in 2023. Big tech is reaching new heights — as well as facing intensifying competition. Corporates are feeling the pressure to build their AI strategies and stay ahead of their peers.

At the same time, enterprises and investors have become more cautious spenders. Venture funding fell to a 6-year low in 2023. Many tech spaces will contend with consolidation in the year ahead, from digital therapeutics to cybersecurity.

Nevertheless, even with limited access to capital, startups continue to make commercial breakthroughs in areas like quantum computing, neurotech, and robotics.

We used the CB Insights technology intelligence platform to cut through the noise and identify 20 under-the-radar trends that will define tech in 2024. We analyzed signals like tech company financings, executive chatter in earnings transcripts, business relationships, customer perspectives, patents, and more.

Our 129-page report digs into trends across major industries including:

• AI
  • GPU shortage forces companies to be smarter
  • Multimodal AI will rise on corporates’ wish lists
  • Synthetic data bonanza
• Enterprise
  • DIY software development upends engineering orgs
  • Global employment & payroll market shakes out
  • Quantum computing advances hint at faster commercialization
• Cybersecurity
  • Cyber chaos drives security consolidation
  • AI vs. AI dogfights redefine data security
• Healthcare & life sciences
  • The great AI drug race heats up
  • Digital therapeutics (DTx) & wellness consolidates
  • The brain becomes a fierce tech battleground
• Financial services & insurance
  • Banks get AI FOMO
  • Blockchain’s uphill finserv battle
  • Extreme weather is an opportunity for insurtech
• Retail & consumer
  • AI sales agents flood the e-commerce landscape
  • Retailers tackle shrink with AI loss prevention
  • AI sends a shockwave through gaming
• Industrials
  • Humanoid robots come for manufacturing
• Venture
  • Corporate venture refocuses on strategic fit
  • Unicorns need a new playbook to survive

Download the full report to see all 20 trends and identify disruptive tech markets, how incumbents are preparing, and the startups vying to change industries.

The post 20 tech trends to watch closely in 2024 appeared first on CB Insights Research.

Based on our deep dive below, here is the TLDR on the state of AI:

• In 2023, AI startups raised $42.5B across 2,500 equity rounds. Although down 10% year-over-year (YoY), AI funding fell far less than broader venture funding (-42% in 2023). AI deal volume decreased by 24% YoY — also less than the decline seen in venture as a whole (-30%). However, the year’s 2,500 deals marked the lowest annual deal count in AI since 2017.
• The US saw AI funding jump 14% YoY in 2023, fueled by mega-rounds. AI funding in Europe, on the other hand, slipped 29%, while it fell a whopping 61% in Asia. The US continues to lead in AI deal share worldwide, with nearly half of all AI deals.  
• Generative AI dominated in 2023, attracting 48% of all AI funding. This was up significantly from 2022, when genAI startups grabbed just 8% of the total. 2023’s surge was driven by massive rounds to large language model (LLM) developers like OpenAI, Anthropic, and Inflection.
• AI deals got bigger in 2023, with the average deal size climbing 21% YoY to $23.4M. The median deal size also held steady YoY at $4.4M — the second-highest level on record — indicating that bigger checks are being doled out across the board, not just to a few AI heavyweights.
• M&A exits rebounded in 2023 to 317, a record high. The acceleration in M&A points to a wave of consolidation, as incumbents look to quickly bring AI capabilities on board so they don’t get caught on the back foot.
• The AI sector minted 22 new unicorns in 2023, down 39% from 2022. However, that’s a much softer decline than other sectors, like fintech and digital health, experienced over the same period. GenAI companies, in particular, are seeing their valuations soar as investors compete for access to deals.
• Google was the most active investor in AI in Q4’23, backing 9 AI startups. It was followed by KB Securities, Nvidia, and Plug and Play Ventures with 8 companies apiece, and then Lightspeed Venture Partners with 7.

Below, we’ll explore these themes across 7 charts.

Amid sweeping declines in venture activity, funding to AI startups remained resilient in 2023, falling just 10% YoY to $42.5B. One-third of this ($14B) was raised by just 3 companies — OpenAI, Anthropic, and Inflection — as the race to develop more advanced LLMs heats up.

In 2023, generative AI startups accounted for 48% of total funding to the AI sector — a far greater share than in any prior year. We expect genAI startups to maintain or even increase this in 2024, as the genAI boom is far from over.

AI deal volume decreased by 24% YoY in 2023. While less severe than the drop in venture deal count more broadly (-30%), this brought AI deal count to 2,500 last year — its lowest level since 2017. 

On a quarterly basis, AI dealmaking fell for a seventh straight quarter in Q4’23. At 554 deals, the quarter was the worst for AI dealmaking since Q2’17. Should this continue in 2024, it will have the effect of narrowing the AI field as investors home in on the companies they think will win out in the long run.

In 2023, US-based AI startups drew 73 cents of every dollar invested in the AI sector. 

The country saw AI funding jump 14% in 2023 — largely because of the previously mentioned model developers, which are all based in the US. The US also accounted for nearly half (46%) of AI deals in 2023, followed by Asia with 25% and Europe with 24%.

In Europe, AI funding dipped 29% YoY to $6.4B, though the continent has seen a steady stream of its own substantial deals. This included 2 mega-rounds (deals worth $100M+) in Q4’23: Germany-based Aleph Alpha’s $500M Series B and France-based Mistral AI’s $415M Series A. Both Aleph Alpha and Mistral AI are model developers competing with the likes of OpenAI.

Meanwhile, funding to Asia-based AI startups tumbled 61% YoY to $3.7B. However, the continent saw funding trend up on a quarterly basis in 2023, suggesting growing momentum. In particular, the United Arab Emirates grabbed 2 mega-rounds in Q4’23.

The proliferation of colossal AI deals — at times stretching into the billions of dollars — has pushed up the sector’s average deal size significantly. In 2023, this came in at $23.4M, up 21% YoY. 

However, the median deal size has also held steady YoY at $4.4M, suggesting that investor attention is spread across AI startups of all sizes and stages.

We’ve even seen early-stage rounds soar past the $100M+ mark — in Q4’23, 3 startups raised Series A mega-rounds:

• Mistral AI ($415M Series A)
• Baichuan AI ($300M Series A)
• Together ($103M Series A)

Notably, all 3 of these companies develop open-source models for generative AI. The deals come at a time when open-source models are closing in on closed-source ones in terms of performance. 

AI excitement has not only gripped investors but also corporations and tech leaders, who are driving a wave of consolidation in the space. M&A exits rebounded in 2023 to reach 317 deals — inching past 2021’s previous all-time high of 316. In many cases, incumbents are looking to add AI capabilities to their platforms; in others, AI leaders are snapping up the competition to capture market share.

The shift toward consolidation drove M&A activity to a new peak in Asia, which saw 54 M&A deals in 2023 — nearly double 2022’s count.

The 2 largest M&A deals in Q4’23 went to US-based companies:

• Corvus Insurance was acquired by Travelers for $435M. Corvus builds cyber risk offerings on top of AI algorithms.
• Gameplanner was acquired by Airbnb for $200M. Launched by one of the founders of Siri, Gameplanner has been operating in stealth since 2020, but it’s expected to work on AI projects within Airbnb.

While there’s been a rapid slowdown in the number of new unicorns across sectors, the excitement around generative AI has helped cushion the blow in AI.

Annually, 2023 saw 22 new AI unicorns, down 39% from 36 in 2022. For comparison, venture as a whole saw new unicorn births plummet 73% YoY — a decline of nearly twice the speed. Other sectors saw even more pronounced declines: -78% (fintech), -79% (digital health), and -88% (retail tech).

Within AI, generative AI companies are reaching unicorn status at hyper speed. Among genAI unicorns, it took just 3.4 years on average to hit the $1B valuation mark — 50% less than the average time for all other unicorns.

The most active investor in private-market AI right now is tech giant Google, investing in 9 AI startups in Q4’23 across its various venture arms. This included a $500M corporate minority round to Anthropic, as Google ups the ante in the big tech battle over genAI.

Google was followed by Korean investment bank KB Securities, Nvidia, and Plug and Play Ventures — all with 8 companies backed — and Lightspeed Venture Partners, with 7.

Google and Nvidia’s inclusion in the top 5 points to the strong link between these tech giants’ investment activity and their internal growth priorities.

Many of their recent investments are customers — e.g., organizations buying Google’s cloud computing power or Nvidia’s chips — and so the tech giants are helping seed their own books of business via these investments. Because of the strategic alignment, with Google and Nvidia both heavily prioritizing AI innovation, those portfolio companies could also make for future acquisition targets. 

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