In 2021, venture funding for AI startups peaked at a little more than $70 billion. Overall funding declined in 2022, and again in 2023. AI is one of the most attractive sectors for VCs, but AI startups raised only about $48 billion in 2023. That’s a 31% decline from the peak.
The aggregate numbers mask the real story. Two companies, OpenAI and Anthropic, secured 35% of all the AI venture money raised in 2023. Ten organizations captured 46% of the new capital. Overall, AI startups raised $17 billion in Corporate rounds, 419% more than in 2021.
AI Venture Funding Summary
| 2021 | 2023 | Change | % Change | |
| Seed/Pre-Seed | $3,790,212,167 | $4,266,901,967 | $476,689,800 | 12.58% |
| Early Venture (AB) | $21,487,803,798 | $13,519,449,795 | -$7,968,354,003 | -37.08% |
| Mid Venture (CD) | $23,651,535,531 | $6,144,888,413 | -$17,506,647,118 | -74.02% |
| Late Venture (E+) | $15,145,274,500 | $2,024,451,287 | -$13,120,823,213 | -86.63% |
| Venture (Other) | $3,117,865,297 | $5,725,447,912 | $2,607,582,615 | 83.63% |
| Corporate Round | $3,210,462,130 | $16,673,465,296 | $13,463,003,166 | 419.35% |
| TOTAL | $70,403,153,423 | $48,354,604,670 | -$22,048,548,753 | -31.32% |
Source: Crunchbase
Seed and Pre-Seed money for AI ventures remained strong in 2023. The number of rounds declined from 1,059 in 2021 to 875 in 2023, but the total amount raised increased by 13% compared to 2021. Elon Musk’s xAI landed the largest Pre-Seed investment, a $135 million stake from a single investor. Other notable seed funding include Mistral’s $113 million round, and $100 million for Poolside, another French GenAI startup.
Funding for middle and late-stage startups has collapsed. In 2021, AI startups landed 231 Series C and Series D venture rounds worth a total of $24 billion. In 2023, they scored only 80 rounds and raised a little more than $6 billion, a decline of 74%.
In 2023, there were only 13 late-stage venture rounds for AI startups, compared to 39 in 2021. Databricks led with a $685 million Series I round led by T. Rowe Price. Other late stage rounds include a $230M Series E for Skydio, a company, building AI-powered drones, and a $215M Series F for HeartFlow, a medical technology company that uses AI for diagnostics.
Generative AI disruption may explain the whales-and-minnows funding pattern. Investors are willing to place big bets on startups with established GenAI tech, such as OpenAI and Anthropic. They are also willing to place small bets on other promising AI startups. But mature AI startups without a credible GenAI solutions that customers are willing to buy now are like last year’s fashion.
Thomas Dinsmore's Blog 
Leave a comment