Global Funding Slowed In Q3, Even As AI Continued To Lead
Global venture funding in the third quarter of 2024 reached $66.5 billion, Crunchbase data shows. That’s down 16% quarter over quarter and 15% year over year from the $78 billion invested in Q3 2023.
We are now nine or 10 quarters into the current startup funding decline. This past quarter was the second below the $70 billion mark since the start of the current venture funding downturn, according to Crunchbase data. Outside of Q4 2023 and this past quarter, one would need to go back to 2017 to find another quarter below $70 billion.
But Q3’s numbers don’t necessarily signal a further pullback in venture funding moving forward, as we’ve seen large fundings fluctuate quarter over quarter this year and last, skewing overall numbers.
Large, late-stage rounds lead drop
In Q3, the steepest decline year over year was seen in late-stage funding and was most evident in the largest rounds, those $500 million and above.
The concentration of venture dollars that went to the largest rounds — those of $100 million or above — was also slightly lower in Q3, at about 46%, compared to about 50% in Q2 and the third quarter of last year.
AI led
AI was the top sector by dollars invested in the third quarter, with funding to artificial intelligence startups reaching close to $19 billion, or 28% of all venture dollars, Crunchbase data shows.
Funding to companies in AI has grown in 2024 by both absolute dollars invested and proportion. Last quarter was the second-largest quarter for AI funding since the mainstream launch of OpenAI’s ChatGPT in November 2022, behind only Q2 2024.
AI surpassed healthcare and biotech, the second-largest sector, which raised more than $15 billion.
Hardware, the third-largest sector, raised more than $13 billion. Financial services companies, meanwhile, raised close to $8 billion.
The largest funding deals in Q3 were all over $500 million:
- Waymo, an autonomous driving service and Alphabet subsidiary, raised $5 billion from its parent company;
- Defense tech startup Anduril Industries raised $1.5 billion in a round led by Founders Fund and Sands Capital Ventures;
- Safe Superintelligence, an AI research lab founded by OpenAI founder Ilya Sutskever, raised $1 billion. The lead investor was not disclosed but Andreessen Horowitz, Sequoia Capital, NFDG Ventures and DST Global participated in the funding;
- Legaltech startup Clio raised $900 million led by New Enterprise Associates; and
- AI chip company Groq raised $640 million led by BlackRock.
Late-stage down YoY
Late-stage funding reached $34.7 billion, flat quarter over quarter and down from $46 billion in the third quarter of 2023, Crunchbase data shows. The biggest change in Q3 from a year earlier was a decrease in the amount invested in deals above $500 million.
Last quarter, large fundings went to autonomous driving, defense tech, professional services, semiconductor and AI model companies.
Early-stage flat YoY
Early-stage funding reached $24.7 billion, down quarter over quarter in large part due to the $6 billion Series B funding to Elon Musk’s OpenAI competitor xAI in the second quarter, which skewed those numbers upward. (On Wednesday, two days into Q4, OpenAI officially announced its own $6.6 billion raise that values it at more than $150 billion.)
Year over year, early-stage funding was flat. By far, large early-stage rounds were dominated by AI and biotech.
Read the full article: https://news.crunchbase.com/venture/global-startup-funding-recap-q3-2024/