If there was any doubt that the generative AI bubble has burst, 2024’s investment numbers put those concerns to rest. According to data from financial tracker PitchBook compiled for TechCrunch, generative AI companies worldwide raised a record-breaking $56 billion from VCs in 2024 across 885 deals.
A New Record for Generative AI Investments
The raw cash total is up 192% from 2023, when investors poured $29.1 billion into generative AI startups across 691 deals. This significant increase demonstrates the growing interest and investment in generative AI technologies, which encompass a range of AI-powered apps, tools, and services to generate text, images, videos, speech, music, and more.
Big Names Continue to Secure Major Raises
"We aren’t seeing a slowdown in generative AI funding," said Ali Javaheri, an emerging technology analyst at PitchBook, in an interview. "Big names like OpenAI, Anthropic, and xAI continue to secure major raises and release new, competitive products."
Deal value in Q4 2024 soared to $31.1 billion with the closure of mammoth rounds like Databricks’ $10 billion Series J, xAI’s $6 billion Series C, Anthropic’s $4 billion strategic investment from Amazon, and OpenAI’s $6.6 billion round.
Mergers and Acquisitions: A Small Share of Generative AI Investments
Mergers and acquisitions were a small share of generative AI investments in 2024, totaling $951 million, per PitchBook data. This is exclusive of the various "acqui-hire" deals executed by Google, Microsoft, and Amazon.
- Google reportedly paid $2.7 billion to hire much of chatbot startup Character AI’s staff and license its technology.
- Microsoft is said to have spent $650 million licensing Inflection’s AI models and hiring its CEO, Mustafa Suleyman.
U.S. Companies Dominate Generative AI Funding
U.S. companies attracted the bulk of generative AI backing last year, with startups outside the U.S. securing just $6.2 billion of all 2024 VC investments in the market.
However, some notable winners outside the U.S. include:
- Beijing-based Moonshot AI ($1 billion in February)
- French startup Mistral (~$640 million in June)
- Cologne-based company DeepL ($300 million in May)
- Shanghainese firm MiniMax ($600 million in March)
- Tokyo-based Sakana AI (~$214 million in September)
What’s Next for Generative AI in 2025?
Javaheri believes that the generative AI sector risks becoming oversaturated with investment, leading to a decrease in quality and innovation. He suggests that investors should focus on supporting more mature companies with proven products.
Additionally, there is growing concern about the lack of transparency and accountability in the generative AI space. As these technologies continue to advance, it’s essential for developers to prioritize explainability, fairness, and safety.
The Future of Generative AI: Opportunities and Challenges
As generative AI continues to grow and evolve, we can expect to see new applications in industries such as healthcare, finance, and education. However, there are also challenges to be addressed, including issues related to bias, security, and regulation.
To navigate these challenges and ensure the continued development of responsible and beneficial generative AI technologies, it’s essential for researchers, policymakers, and industry leaders to work together to establish clear guidelines and standards.
Conclusion
The record-breaking investment numbers in 2024 demonstrate the growing interest and investment in generative AI technologies. As this sector continues to grow and evolve, we can expect to see new applications and innovations that transform industries and improve lives.
However, it’s also essential for developers and investors to prioritize transparency, accountability, and responsibility as they advance these technologies. By working together, we can ensure the continued development of generative AI in a way that benefits society as a whole.
