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Infographic – U-Turn on A.I. Venture Funds in Q1

Chart: Venture funds for artificial intelligence by quarter to Q1 2023

Click on image for full-size view (CB Insights)

20 May 2023. When we last looked in March, venture funding for artificial intelligence start-ups showed a glimmer of hope as investment dollars turned up in the fourth quarter of 2022. Those hopes are now all but dashed as a new report from technology intelligence company CB Insights (subscription required) indicates a sharp downturn in venture funds for this sector.

The report shows global investment dollars for A.I. start-ups fell from $9.5 billion in Q4 2022 to $5.4 billion in the first three months of 2023, a 43 percent decline. In addition, the number of venture transactions fell from 622 to 554 in Q1 2023, a drop of 11 percent from the previous quarter. Both the total investment dollars and number of venture deals in Q1 2023 are the lowest single quarter totals since 2019.

In the U.S., total venture dollars for A.I. start-ups reflected the worldwide totals for Q1 2023, falling 27 percent to $3.7 billion from $5.1 billion in Q4 2022. The only sprinkling of sugar on this otherwise sour report is an uptick in investment dollars for A.I. in Silicon Valley, which rose to $2.4 billion in Q1, from $1.7 billion in the previous quarter.

Plus, mergers and acquisitions of A.I. start-ups also rose to 75 in the first quarter of 2023, continuing an upward trend from 45 in the third quarter of 2022. However, A.I. start-ups going public almost disappeared in Q1, with only two IPOs and no SPAC mergers at all.

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