AI Startups Raised $5.7 Billion YTD, almost 40% more than in Q1 2023

After raising $25.5 billion in funding rounds last year, AI startups continue drawing a lot of attention from VC investors. The strong funding activity in the past two months has helped AI startups to outperform Q1 2023 figures four weeks before the end of the quarter.

According to data presented by Stocklytics.com, AI startups have raised $5.7 billion year-to-date, almost 40% more than in Q1 2023.

More Fresh Capital in Fewer Funding Rounds

The explosive growth of the AI market has drawn a lot of attention from VC investors in recent years. Since 2020, the market has nearly tripled and is expected to hit $305 billion in revenue and 315 million users this year. That is why investors continued pouring money into AI companies and startups, even when most other sectors saw a considerable drop in VC funding.

According to Crunchbase data, 2021 remains the record year for fundraising activity in the AI startup market. That year alone, startups working in the AI space raised a whopping $49.6 billion, more than double the figure reported a year before. After a fantastic 2021, fundraising dropped by 37% year-over-year, but AI startups still raised almost $31 billion in 2022. The funding slowdown continued last year, with companies working in this space raising $5.4 billion less than in 2022 or $25.5 billion in total.

However, the funding activity again gained momentum this year, with companies raising more money in the first two months than in Q1 2023. Statistics show AI startups raised $5.7 billion year-to-date, or $1.6 billion more than in the first three months of 2023.

Interestingly, while the total funding amount increased, the number of funding rounds dropped, showing AI startups managed to raise more fresh capital in fewer funding rounds. The Crunchbase data show AI startups saw 46 VC investments year-to-date, down from 86 in Q1 2023.

AI Startups Hit $173.5 Billion in Total Funding

With nearly $6 billion raised in funding rounds since the beginning of the year, the cumulative funding amount in the AI startup market has climbed to $173.5 billion.

More than 55% of that value, or $96.2 billion, went to companies from the United States, with California as the leading hub. Asian AI startups raised the second-highest value in funding rounds, or $46.7 billion, and European companies follow with $23.8 billion in total funding.

Statistics also show machine learning startups raised by far the most money in funding rounds, or $79 billion so far. AI software and AI analytics startups follow, with $67 billion and $29 billion, respectively.