In 2024, the surge in investment in Generative AI remains unabated, with global investment reaching new heights. According to financial tracking firm PitchBook, last year, global Generative AI companies raised a total of $56 billion in venture capital across 885 deals. This represents a staggering 192% increase compared to the $29.1 billion raised in 2023.
In this field, well-known companies such as OpenAI, Anthropic, and xAI continue to attract significant investments while consistently launching new products that drive industry growth. In the fourth quarter of 2024, investments soared to $31.1 billion, including large financing cases such as Databricks' $10 billion Series J funding, xAI's $6 billion Series C funding, Anthropic's $4 billion strategic investment from Amazon, and OpenAI's $6.6 billion funding.
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However, despite the ongoing investment frenzy, mergers and acquisitions account for a relatively small portion of Generative AI investments, totaling approximately $951 million. It's important to note that this figure does not include "acquihire" transactions by companies like Google, Microsoft, and Amazon. For instance, Google acquired most of the employees and technology of chatbot startup Character AI for $2.7 billion, while Microsoft obtained Inflection's AI model and hired its CEO Mustafa Suleyman for $650 million.
U.S. companies attracted the majority of Generative AI investments in 2024, with overseas startups receiving only $6.2 billion in venture capital. Nevertheless, some international startups have performed exceptionally well, such as Beijing's Moonshot AI, which raised $1 billion in February, France's Mistral with approximately $640 million in June, Germany's DeepL with $300 million in May, and Shanghai's MiniMax, which secured $600 million in March.
Looking ahead to 2025, industry analyst Ali Javaheri warns that the Generative AI market may face oversaturation, with many startups competing in similar verticals. He noted that in 2024, four companies developed AI coding assistants and secured over $100 million in funding. Additionally, several Generative media startups (like Black Forest Labs and ElevenLabs) received tens of millions of dollars in investments at high valuations.
As investors increase pressure for sustainable revenue growth, the industry's sustainability faces challenges. Javaheri stated that technological difficulties and high computational costs may exert additional pressure on Generative AI startups. He emphasized that only well-funded startups will be able to keep pace with the rapid innovation of models.
Fortunately, infrastructure-level Generative AI companies performed well in 2024. Data center startups like Crusoe and Lambda also excelled in fundraising, securing $600 million and $320 million, respectively. Investment firm KKR predicts that global demand for data centers will drive related spending to reach $250 billion annually.
