In 2023, startups specializing in Generative AI (GenAI) secured an impressive $10 billion in global venture capital, marking a substantial 110% increase from 2021, as revealed in a recent report. Despite an overall decline in startup funding, which reached $224 billion globally by December 8, 2023, reflecting a 65% drop since the record-setting year of 2021 when startups raised $655 billion, the GenAI sector stands out.
GenAI Startups Defy ‘Startup Winter’: A GlobalData Analysis of Funding Trends and Geographic Patterns
GlobalData, a prominent data and analytics company, highlights the unique trajectory of GenAI startups amid the broader slowdown in startup funding, often referred to as ‘startup winter.’ Adarsh Jain, CFA, Director of the Financial Markets team at GlobalData, attributes this remarkable performance to the groundbreaking nature of GenAI technology, its widespread applicability, and its transformative potential across various sectors.
From 2018 onward, GenAI startups in the United States secured the majority of funding, claiming a 75% share ($16 billion), followed by Israel, Germany, France, the UK, and China, contributing an additional 15% share. Early-stage startups constituted 40% of all deal volumes, with seed-stage startups making up 37%, indicating a substantial presence of first-time funding for GenAI startups.
GenAI’s Bright Future: Growth Prospects, Patenting Trends, and Industry Impact Beyond 2024
Jain anticipates continued investment in GenAI startups in 2024 and beyond, emphasizing the technology’s solid drivers. Patenting activity in GenAI, exhibiting an 85% Compound Annual Growth Rate (CAGR) over the last five years, adds further support to the positive outlook.
Companies across various industries are actively expanding their human capital by recruiting talent in the GenAI field, and investors are responding with higher valuations for companies focusing on GenAI capabilities. Noteworthy examples include Google’s share price increase following the announcement of its Gemini artificial intelligence model and funding secured by companies like Sarvam AI in India, Cradle in the Netherlands, and Assembly AI, which is leveraging GenAI for Speech AI models.
In conclusion, GenAI emerges as a transformative technology with widespread impact across industries, positioning it favorably for continued investment and growth well into 2024 and beyond.
