Artificial intelligence is keeping the venture capital ecosystem afloat. It accounted for more than 40% of new private U.S. “unicorns” in the first half this year, and over 60% of the increase in total venture-backed valuation, per PitchBook. There were 13 new U.S. AI unicorns — private companies that reached valuations of over $1 billion — between Jan. 1 and June 25 of this year. Elon Musk’s xAI on its own added $24 billion in valuation, while all AI unicorn companies combined added $116 billion in aggregate value. Overall U.S. unicorn value has grown by $162 billion so far this year. Over the past few years, AI accounted for about 15%-17% of venture dollars invested in North America and Europe. That number increased to about 20% in 2023 and is rising even more in 2024, according to PitchBook senior emerging technology analyst Brendan Burke. Even AI wasn’t immune to the exuberance seen 2021. “There’s an entire universe of 40,000 companies that incorporated machine learning into their applications, and many that were funded during the bull market haven’t achieved their goals,” says Burke.
“Those megadeals from the late bull market haven’t sustained their valuations.” Inflection, which last year raised $1.3 billion at a $4 billion valuation, struggled to find a sustainable business model, and its founders joined Microsoft earlier this year while the startup pivots to selling tech to businesses.
Full report : How AI is driving the venture capital market.
