State of AI in Venture Capital 2024

Part II: 70 Large AI Investment Rounds in 2024 Across 10 Categories, plus a huge list at the end.

Michael Spencer

and

Alex Irina Sandu

Aug 01, 2024

∙ Paid

Hello Everyone,

Today we continue our State of AI in Venture Capital series, to check the last one go here. Our Who to Follow in AI series resumes next Thursday.

Investments in AI startups in 2024 have surged dramatically. Even Microsoft is calling OpenAI, a competitor in AI and Search. With Baichuan raising nearly $700 million and Cohere another $500 million, we are still seeing massive rounds in Generative AI and model builders.

Generative AI Funding Doesn’t Live in a Vacuum

This, even as Capital expenditures of Meta, Microsoft and other hyperscalers shows companies with the deepest pockets are able to make some of the wildest (and most long-term) bets and also due to how Generative AI can impact digital advertising and Cloud growth - two of the dominant business models today. The Facebook parent is spending heavily on artificial intelligence and virtual reality, a big area of focus for investors. Meta will likely spend at or over $40 billion on CapEx alone in 2024.

Microsoft and Meta are among Nvidia’s biggest AI chip customers. So hyperscale Cap-Ex in AI is fueling an incredible AI bull market. This also gives more optimism to VCs in their own bets in the space. Earlier this year, Zuckerberg said that Meta’s computing infrastructure will include 350,000 Nvidia H100 graphics cards, the expensive computer chips used to train so-called large language models and related AI software, by the end of 2024. Microsoft’s investments in AI make take longer to generate revenue than some anticipated. Amy Hood the CFO said nearly all of Microsoft's $19 billion in capital expenditures were related to cloud or AI investments.Of the 29% growth for Azure and other cloud services, 8 percentage points came from AI services, Microsoft said. Moreover the digital advertising and Cloud growth of Meta and Microsoft mean shareholders don’t mind their huge bets on AI that impacts the underlying ecosystem.

Generative AI Spending in Q1 2024

Here’s how the H1 2024 total broke down by stage:

198 angel/seed deals: $500 million
39 early-stage deals: $8.7 billion
18 late-stage deals: $3.1 billion

2024 Could be the Peak of Generative AI Funding

We think Generative AI companies are on track to match or exceed the roughly $21.8 billion they raised in 2023. The massive round for xAI of $6 Billion is less than half the $13 Bn Microsoft invested in OpenAI. However xAI is seeking another $5 billion potentially from Tesla itself. Elon Musk’s companies have a history of working with and paying one another.

I asked

Alex Irina Sandu

about her thoughts on the AI Venture Capital ecosystem and she did a lot of work for this article in breaking down the space by category. Her market research, visuals and product strategy is top notch, hire her here.

With her help in this article we’ll quickly gain a full understanding of some of the top startups in each category. This is going to be a long read so read it on the web and bookmark it for further reading.

As CapEx to returns on investment (ROI) in AI are more scrutinized among hyperscalers themselves it’s obvious that investors in generative AI are playing the long game, particularly BigTech investors themselves like Nvidia and Amazon which see generative AI investments as strategic bets. It’s going to be a pretty mixed bag with some huge winners and losers in the next decade.

Let’s examine this ecosystem though in a lot more detail.

Read on the Web

10 Categories We’ll Cover

She breaks the top AI Startups that got funding into easy to examine categories:

Compute
Models & Developer Tools
Visual & Audio Content Generation
Healthcare
Employee & Customer Support
Search & Answers
Coding Assistants
Business Task Automation
Robotics
Autonomous Driving

70 Large AI Investment Rounds in 2024 Across 10 Categories

Alex Irina Sandu

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Start-up funding rounds are an indicator of what use cases hold the most potential in the eyes of founders, their customers and VC investors. AI is a technology with a very broad range of applications and builders from many verticals are experimenting, deploying and offering solutions across the stack and the spectrum of human activities, from leisure and entertainment to many professional activities. Some AI use cases are in their fastest growth phase now, ready to start maturing this year, while others will take off slower in the coming phases of AI development.

Let’s look at the AI start-ups that have been funded well so far in 2024.

This is a collection of over 70 individual funding rounds, published in two parts, from the past six months from around the world that are larger than US$50M, making up over US$18.6B, and an analysis of the AI areas and the drivers that are considered most promising in the market today.

The ten categories that received large individual investments are:

The vast majority of the start-ups in this collection are based in the United States and the San Francisco Bay Area, and others are headquartered in London, Toronto, Seoul, Berlin and Beijing, among others.

The collection includes 4 Seed rounds, 8 Series A, 14 Series B, 13 Series C, 4 Series D, 1 Series E and 1 Series F.

AI Compute Accelerators and GPU Clouds

The AI compute market is experiencing rapid growth, driven by escalating demand for low-latency inference and efficient training of models. The rising need is generated by the requirements of deploying autonomous driving and conversational AI at scale. Partially or fully self-driving vehicles require fast inference to make split-second decisions in order to maintain safety on the roads, while conversational AI at scale requires low latency conditions in order to serve a lot of customers at the same time.

Companies innovating to optimize the AI compute layer that received large investment rounds this year are: CoreWeave, Lambda, Celestial AI, Rebellions AI, Hailo, Etched AI, Blaize, Recogni, Foundry, SiMa. They range from dedicated GPU cloud providers to makers of optical interconnect technology and producers of Neural Processing Units (NPUs).

CoreWeave provides a Kubernetes native cloud built for large, GPU-accelerated workloads, which can be used for AI inference, as well as VFX and rendering. Based in Roseland, New Jersey, the company last raised a US$1.1B Series C from investors including Coatue, Magnetar and Altimeter Capital.

Lambda is a GPU cloud built for AI developers featuring NVIDIA H100, NVIDIA H200 and NVIDIA Blackwell GPUs for AI training & inference. Based in San Jose, CA, the company last raised a US$350M Series C led by the US Innovative Technology Fund and joined by B Capital, SK Telecom, T. Rowe Price Associates, Inc., and existing investors Crescent Cove, Mercato Partners, 1517 Fund, Bloomberg Beta, and Gradient Ventures.

Celestial AI is the creator of the Photonic Fabric, an optical interconnect technology platform for compute and memory, which enables data transmission directly to the point of compute within AI accelerators and GPUs, in order to reduce latency and power consumption. Based in Santa Clara, CA, the company last raised a US$175M Series C led by the US Innovation Technology Fund and joined by AMD Ventures, Koch Disruptive Technologies (KDT), Temasek, IAG Capital Partners and Samsung Catalyst, among others.

Rebellions AI aims to “Reimagine AI compute”, with its Neural Processing Units (NPUs), optimized for latency-critical inference workloads and hyper-scale machine learning. Based in Seoul, South Korea, the company last raised a US$124M Series B from investors including KT, Shinhan Venture Investment, Temasek Pavilion Capital, Korea Development Bank and Korelya Capital.

Hailo provides edge and computer vision AI processors and accelerators for verticals such as automotive, security, industrial automation, retail and personal compute. Based in Tel Aviv, Israel, the company last raised a US$120M from investors including Comasco and OurCrowd.

Etched AI is the developer of Sohu, a transformer ASIC (application-specific integrated circuit) designed to train, deploy and optimize models with less power than a GPU. Based in Menlo Park, CA the company last raised a US$120M Series A from investors including Peter Thiel and Amjad Masad.

Blaize provides a full-stack AI computing platform that includes SoCs optimized for running models efficiently on edge devices, as well as a low-code / no-code software suite for AI application deployment. Based in El Dorado Hills, CA, the company last raised a US$106M round from investors including Bess Ventures, Franklin Templeton, DENSO, Mercedes-Benz AG, and Temasek.

Recogni focuses on inference computing and provides an AI cloud, pretrained models and a SDK for autonomous vehicles and generative AI. Based on San Jose, CA, the company last raised a US$102M Series C led by Celesta Capital and GreatPoint Ventures and joined by Mayfield, DNS Capital, BMW i Ventures, and SW Mobility Fund, among others.

Foundry is a GPU cloud provider optimized for machine learning workloads who aims to “orchestrate the world’s compute capacity, rendering it universally accessible and useful”. Based in Palo Alto, CA, the company last raised a US$80M Series A from investors including Sequoia Capital, Lightspeed Venture Partners, Redpoint, Microsoft Ventures (M12), Conviction and NEA.

SiMa provides a MLSoC (Machine Learning System-on-Chip) platform for deploying and scaling AI at the edge, with focus on computer vision applications, such as industrial robotics and autonomous vehicles. Based in San Jose, CA, the company last raised a US$70M Series C led by Maverick Capital and joined by Point72, Jericho, Amplify Partners and Dell Technologies Capital, among others.

AI Model & Developer Tools

The strong growth in the AI model and developer tools segment is fueled by the demand for a large variety of licenseable models, model training platforms and software development platforms that can cover the diverse array of use cases AI can address and the needs of the developers building the applications.

At the same time, there are significant challenges that need to be addressed, such as hallucinations, improving model interpretability, and safety and alignment. Developers need tools that not only facilitate the creation and deployment of AI products but are also reliable and performant in real-world scenarios.

This year the market has been experiencing a surge in investment and development activity aimed at delivering the tools and models that can overcome these challenges and unlock the full potential of AI across many domains.

The start-ups that received large investments in 2024 are: X.AI, Anthropic, Scale AI, Mistral AI, Cohere, Kore AI, Together AI, Reka AI, Krutrim and Hume AI.

x.AI is the provider of the Grok series of foundation models and a start-up focused on the development of advanced AI systems that are beneficial for all of humanity and help us understand “the true nature of the universe”. Based in Burlingame, CA, the company last raised a US$6B Series B from investors including Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital.

Anthropic is the developer of the Claude foundation model series and an AI safety research start-up. Based in San Francisco, CA, the company raised a US$750M round in February led by Menlo Ventures and a US$4B round in March from Amazon.

Scale AI provides data annotation and labeling services to help companies build high-quality training datasets for machine learning applications. Based in San Francisco, CA, the company last raised a US$1B Series F led by Accel and joined by Y Combinator, Nat Friedman, Index Ventures, Founders Fund, Coatue, Thrive Capital, Spark Capital, NVIDIA, Tiger Global Management, among others.

Mistral AI is the developer of the Mistral series of foundation models and provider of an AI application development platform that prioritizes openness, portability and value. Based in Paris, France, the company last raised a US$645M round led by General Catalyst and joined by Lightspeed Ventures and a16z.

Cohere provides a series of foundation models optimized for enterprise use and RAG applications, as well as an application development platform. Based in Toronto, Canada, the company last raised a US$450M round from investors including NVIDIA, Salesforce Ventures and Cisco.

Kore AI builds a developer platform featuring pretrained LLMs, no-code builder tools and virtual assistants that can be deployed within enterprises for a variety of use cases, from customer support to employee experience and enterprise search. Based in Orlando, FL, the company last raised a US$150M Series D led by FTC Capital, with participation from NVIDIA, Vistara Growth, Sweetwater PE and NextEquity.

Together AI offers a cloud platform for building and running generative AI, as well as the RedPajama foundation model series. Based in San Francisco, the company last raised a US$106M Series A led by Salesforce Ventures and joined by Coatue, Lux Capital and Emergence Capital.

Reka AI provides multimodal foundation models trained with proprietary data from various industries, such as commerce, financial services, healthcare and robotics. Based in Sunnyvale, CA, the company last raised a US$60M round led by DST Global Partners and Radical Ventures and joined by Snowflake Ventures, among others.

Krutrim is on a mission to enable India’s 1.4B consumers, developers and entrepreneurs with the power of AI and provides foundation models, cloud infrastructure and silicon optimized for machine learning. Based in Bangalore, India, the company last raised a US$50M Series A led by Matrix Partners India.

Hume AI develops multimodal AI that gives applications emotional intelligence. Its voice AI is built to respond empathically and better align technology with human interests by measuring vocal modulations and matching prosody, end-of-turn detection, and interruptibility to its conversation partners. Based in New York, NY, the company last raised a US$50M Series B led by EQT Ventures and joined by Union Square Ventures, Metaplanet, Northwell Holdings, Comcast Ventures, and LG Technology Ventures.

This article is available for free reading on Saturday August 17th at 7 AM, for a few days. Or you can try a free trial to check out the rest of the categories and my own list at the end.