AI Investments Skyrocket by 62% to $110 Billion in 2024 Amid Broader Startup Funding Decline
Venture capitalists are continuing their strong push into artificial intelligence (AI), pouring record-breaking amounts into AI startups even as overall startup funding experiences a downturn. According to new data from analytics firm Dealroom, AI startups secured $110 billion in funding in 2024, marking a 62% increase from the previous year. Meanwhile, the broader technology startup ecosystem—which includes both startups and scale-ups—saw a 12% decline in funding, raising $227 billion in total.
The surge in AI funding highlights how investor enthusiasm for AI-driven innovation has outpaced other sectors, making AI the dominant force in venture capital. Yoram Wijngaarde, founder of Dealroom, noted that while marketplaces once commanded significant investment interest in the late 1990s and early 2000s, nothing compares to the sheer scale of AI-driven investment today.
“This is the biggest wave ever by absolute amounts invested,” Wijngaarde said. “There’s never been anything like it.”
Why AI is Dominating Investment Trends
The explosion of AI funding can be attributed to its widespread impact across multiple industries. Unlike other tech booms, AI is not confined to a single vertical or use case—it touches hardware, infrastructure, foundational models, applications, and data management. This broad applicability has made AI a cornerstone of investment strategy for venture capital firms looking for the next major technological breakthrough.
A look at some of the largest AI funding rounds in 2024 highlights the diverse range of AI applications attracting investor interest:
- Anthropic – A major player in large language models and generative AI
- Waymo – A leader in self-driving technology
- Anduril – Focused on AI-driven defense solutions
- xAI – Specializing in AI applications
- Databricks – Known for its AI-focused data processing and management
- Vantage – Providing data center and AI infrastructure solutions
While OpenAI remains the most recognized name in AI, it was not the top fundraiser in 2024. That distinction went to Databricks, which raised $10 billion, surpassing OpenAI’s $6.6 billion.
However, OpenAI still holds the highest aggregate funding to date, having raised more than $20 billion with another $40 billion reportedly in progress. With the viral success of ChatGPT, OpenAI has become a bellwether for AI industry trends, influencing how investors allocate capital in the sector.
Generative AI and Foundational Models Driving Investment Activity
The rapid expansion of generative AI and foundational AI models has been a key driver of venture capital activity. In 2024, companies specializing in generative AI secured $47.4 billion in funding, reflecting strong investor confidence in the technology’s potential to reshape industries.
Foundational AI technologies—such as advanced neural networks, deep learning frameworks, and AI model training infrastructure—have also overtaken AI applications in funding growth over the past two years. This shift indicates that investors are prioritizing core AI capabilities, which serve as the building blocks for future AI-powered innovations.
AI Investment Concentrated in the U.S., Lagging in Europe
The dominance of U.S.-based AI startups in the global investment landscape is evident in Dealroom’s report. Of the total $110 billion invested in AI in 2024, an overwhelming 42% ($80.7 billion) was funneled into U.S.-based AI startups.
By contrast:
- Europe received only 25% ($12.8 billion) of total AI investments
- The rest of the world accounted for 18%
- China stood out with $7.6 billion in AI investments, maintaining its position as a key player in AI development
The stark disparity in AI funding between the U.S. and Europe has raised concerns about the region’s competitiveness in AI innovation. Wijngaarde pointed out that Europe faces a challenge akin to the “innovator’s dilemma”, where existing industries may be reluctant to disrupt their own established markets in favor of emerging AI technologies.
“In Europe, we have a bit of an innovator’s dilemma,” Wijngaarde said. “We don’t want to replace what we have, and that can be a less aggressive position.”
This cautious approach could place European AI startups at a disadvantage compared to their U.S. and Chinese counterparts, who are seeing far greater investment flows.
AI Investment Trends and Future Outlook
The Dealroom report was published in conjunction with a week of AI-focused events in Paris, organized around France’s AI Action Summit. One of the key themes of the summit is championing equitable AI development and ensuring greater investment in AI startups outside of the U.S.
As AI adoption continues to accelerate across industries, the funding gap between regions will likely remain a major discussion point. Governments and policymakers in Europe and other regions may need to implement strategies to attract more AI investment, ensuring that AI growth is not overly concentrated in just a few key markets.
Conclusion
The dramatic 62% rise in AI funding in 2024 underscores the unprecedented investor confidence in the sector. While broader technology startup funding has declined, AI has emerged as the most sought-after investment area, driven by its far-reaching impact on industries ranging from data management to autonomous vehicles.
With the U.S. capturing the lion’s share of AI investments, other regions—including Europe and China—are seeking ways to boost AI innovation and compete on a global scale. As AI technology continues to evolve and mature, the next wave of funding may focus on bridging regional investment gaps, fostering more equitable AI development, and driving long-term industry transformation.
