Global Funding And M&A Picked Up In Q2, While AI Funding Mushroomed
Global startup funding picked up in the second quarter, reaching $79 billion — rising 16% quarter over quarter and 12% from the $71 billion invested in Q2 2023. Mega-rounds — fundings $100 million and above — accounted for much of the increase this past quarter.
Funding to companies in AI more than doubled quarter over quarter to $24 billion — representing 30% of all dollars invested, the largest quarter for AI funding in recent years. And there are signs that larger M&A deals increased in Q2, providing much-needed liquidity to venture capital markets.
Crunchbase data shows we are eight to nine quarters into the current funding decline. While this past quarter was amongst the highest for funding since Q1 2023, it is not necessarily a signal of a venture market comeback. Since 2023, funding has fluctuated quarter by quarter based on an increase in large growth rounds to pre-IPO companies and to companies in the AI sector. This past quarter is no exception.
AI boost
AI was the leading sector for the first time since the launch of OpenAI’s ChatGPT, based on an analysis of Crunchbase data. Q2’s total of $24 billion was the largest amount raised in a quarter in the AI sector in recent years, despite investor concerns about revenue and high valuations.
Five out of six billion-dollar funding rounds went to AI companies. Elon Musk’s xAI raised $6 billion, and AI infrastructure provider CoreWeave raised $1.1 billion. Automated driving company Wayve, data preparation company Scale AI and AI biotech company Xaira Therapeutics each raised billion-dollar rounds. Outside of AI, cybersecurity company Wiz raised a billion-dollar round.
Healthcare and biotech was the second-largest sector, raising $17 billion. Hardware companies — in large part due to AI infrastructure and semiconductor fundings — raised $11 billion. Financial services companies, typically in the top two sectors in the peak market of 2021, raised $9.8 billion.
Half-year update
Despite the uptick in the last quarter, funding for the first half of this year did not increase. Global funding reached $147 billion in H1, marking a 5% decline year over year, down from the $154 billion invested in H1 2023. And funding was flat compared to the second half of 2023.
Late-stage funding up
Late-stage funding reached $36 billion, up from $33 billion in the second quarter of 2023. Large fundings went to AI foundation model and AI infrastructure companies, autonomous driving, electric vehicles, cybersecurity, drug development and quantum computing companies.
Early-stage up
Early-stage funding was up in Q2, in large part due to the funding to xAI. Outside of the xAI financing, funding was in line quarter over quarter and year over year. Large early-stage rounds also went to biotech, lending, AI and renewable energy companies.
Read the full article: https://news.crunchbase.com/data/global-funding-ai-biotech-h-2024/
