AI venture capital deal volume shrinks 27%: Pitchbook

Dive Brief:

The variety of venture capital offers involving generative synthetic intelligence declined 27% within the third quarter, following large investments from massive tech corporations earlier within the yr, in response to analysis agency Pitchbook.

Total deal volume fell to 107 funding rounds in Q3, down from 146 in Q2, in response to information offered by Pitchbook. But mixture deal worth elevated by about 39% to $6.1 billion, buoyed by Amazon’s $4 billion funding in San Francisco-based AI startup Anthropic.

“I think about curiosity to stay excessive and anticipate funding rounds to proceed to get carried out, however loads of that was front-loaded into Q1 and Q2 of this yr, and a number of the leaders on this area at the moment are nicely capitalized,” Brendan Burke, Pitchbook’s senior rising tech analyst, stated in an interview.

Dive Insight:
Investor curiosity in AI surged within the wake of Microsoft-backed startup OpenAI’s introduction of ChatGPT in late 2022, in response to a report from KPMG.
“AI has shortly grow to be a goal sector for VC traders who’re on the lookout for their subsequent residence run or experiencing the fear-of-missing-out (FOMO), partly due to the multiplier impact that AI choices may have in driving widespread disruption throughout industries,” the report stated.
Microsoft in January introduced a multi-billion-dollar funding deal with OpenAI.
Meanwhile, Google was among the many lead traders in a May funding spherical introduced by OpenAI rival Anthropic. The funding spherical, which additionally included Salesforce Ventures and Zoom Ventures as traders, raised $450 million. This adopted a deal a couple of months earlier by which Google reportedly invested $300 million in Anthropic for a ten% stake within the firm.
Other massive AI offers this yr embody a $1.3 billion funding in Inflection AI. The funding spherical, introduced in June, was led by Microsoft and NVIDIA, amongst others.
Revenues of generative AI choices throughout a broad vary of classes are forecast to achieve $3.7 billion this yr and broaden to $36 billion by 2028, in response to S&P Global Market Intelligence.
AI-related phrases have been talked about a complete of seven,358 occasions within the earnings calls of S&P 500 corporations in the course of the second quarter — 4.6 extra occasions than the earlier quarter and three.3 extra occasions than within the fourth quarter of 2022, in response to Business Insider.
However, at the least a number of the preliminary hype surrounding the know-how may be fading, as reported by the Wall Street Journal in August.
Monthly on-line guests to ChatGPT decreased by 10% in each June and July after months of progress, the publication reported, citing information from Similarweb.
Jasper, a generative AI writing software for writers and companies, noticed declining consumer progress for 4 consecutive months ending in July. The firm carried out a spherical of layoffs in July and reduce income projections for this yr, after elevating $125 million in 2022, the Journal reported.

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