OpenAI recently raised $6.6 billion at a valuation of $157 billion, but it’s far from the only AI company with significant fundraising potential. Investors poured $2.9 billion from July to September (Q3) of 2024 into recent US-based AI startups, according to PitchBook data.
The three US startups that received the most funding are AI software development startup Magic, enterprise ChatGPT startup Glean, and AI document search startup Hebbia, per TechCrunch. The trio earned $320 million, $260 million, and $130 million respectively in the third quarter.
Magic is creating an AI that can write code and Glean is working on an AI search app for businesses. Hebbia focuses on AI agents in finance, law, and large corporations.
A previous PitchBook report from August shows that investor interest in AI is long-term and extends beyond the last quarter. The report revealed that AI accounted for 41% of US VC deals in the first quarter of 2024, with $38.6 billion of the $93.4 billion in VC deals going to AI startups.
Related: AI Startups Raised $50 Billion Last Year, But Some Investors Are Starting to Pass – Here’s Why
Going back to last year, AI was one of the few fastest growing industries in unicorn startups, or businesses valued at more than $1 billion. In one tough fundraising year, the number of AI unicorns grew by 22.9%.
Although it presents opportunities, AI carries its own unique challenges. For one, the cost of developing an AI model is high. Anthropic CEO Dario Amodei said in July that it would take $10 billion to train AI “better than most people at most things.” He estimated that AI companies will reach that point within the next three years and that it now takes about $100 million to train an AI model.
AI also has a cheaper electricity bill. Microsoft, Google, and other major technology companies are turning to nuclear power as a carbon-free energy source; AI helped increase Google’s greenhouse emissions by 48% over four years.
Nevertheless, AI remains an area of great interest among innovators. 156 out of 208 startups accepted into the summer class of Y Combinator, the popular, AI-focused startup accelerator.
Related: IY Combinator Helped Launch Reddit, Airbnb and Dropbox. Here’s What I Learned at Its First Free School.
One non-Y Combinator co-founder, Sahil Agarwal of AI security startup Enkrypt AI, spoke to entrepreneurs earlier this year about the risks and opportunities AI creates.
“What ChatGPT has done is make AI a reality for everyone,” he said.
Source link
