AI/ML dominated Q3 2024 early-stage VC funding with $2B across 42 deals, despite a decline from Q2’s $8B due to fewer outlier deals. Investor interest in the sector remains strong, far outpacing biotech funding of $472.5M.
Artificial intelligence (AI) and machine learning (ML) continued to dominate early-stage venture capital (VC) investment in the third quarter of 2024, as indicated by Pitchbook’s Emerging Tech Indicator report.
AI/ML companies raised an estimated $2 billion across 42 deals, surpassing biotech funding by over four times ($472.5 million). However, the total was substantially lower than the $8 billion raised in Q2 across 53 deals.
This decline was primarily caused by two outlier transactions: Safe Superintelligence’s $1 billion raise and xAI‘s $6 billion funding round. In addition to these two, the report suggests that AI/ML funding activity remains robust, suggesting that investor interest in the sector remains persistent.
“Excluding these outliers, Q3 funding reflects a steady normalization in activity, with deal volume underscoring continued investor interest across the sector,” the report explained.
Q3 saw a significant increase in fintech funding, with companies raising $449 million, which is nearly double the $228.4 million raised in the previous quarter, according to Pitchbook data. The number of transactions decreased from 25 in Q2 to 18 in Q3, despite an increase in funding.
Slope, which raised $65 million to expand its business payment and finance platform, was involved in key fintech funding transactions. Coast raised $40 million and Neo Asset Management secured $47.9 million to improve its fleet payment card management system.
The report also emphasizes a substantial increase in investment activity in Web3 and decentralized finance (DeFi), with funding increasing from $93.9 million in Q2 to $373.8 million in Q3. This increase is due to the resurgence of investor interest in decentralized platforms and blockchain technologies.
The sector was dominated by Story Protocol and ID Planet, which each raised $80 million in Series B rounds. Chaos Labs, a cloud-based blockchain platform, raised $55 million, while Partior, a blockchain-based cross-border payments platform, secured $60 million in a Series B funding round.
