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Infographic: A.I. Getting Hype, But Fewer Venture Funds

Bar chart: Venture funding in artificial intelligence by quarter, 2019 to 2023

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

25 Nov. 2023. With all the headlines generated by artificial intelligence these days, one would expect investors would show as much enthusiasm for the technology. According to CB Insights, however, venture investments in A.I. are declining each quarter in 2023, with the number of venture deals reaching a low level not seen since 2017.

In its report issued earlier this month (registration required), technology intelligence company CB Insights says venture investments in A.I. worldwide declined to $8.3 billion in the third quarter of 2023, down from $9.4 billion in the second quarter and $$15.2 billion in Q1. In addition, the number of venture investment transactions in A.I. in the third quarter fell to 501, which CB Insights says is the fewest number of deals for a three-month period since 2017.

In an historical context, the CB Insights report looks less discouraging. The $8.3 billion raised by A.I. start-ups in Q3 2023 is comparable to quarterly investment totals worldwide in pre-pandemic 2019, with the average deal size rising in the third quarter to $26.3 million, from $19.6 million in Q2, and down slightly from $29.3 million in Q1. The median deal size — the half-way mark of smallest to largest transactions — so far this year, however, fell to $4 million by the third quarter, from $4.5 million in 2022 and $5.5 million in 2021.

CB Insights also notes that U.S.-based A.I. start-ups raised $5.8 billion, 70 percent of all venture dollars in the third quarter of 2023, in 236 of the 501 deals. Among the top A.I. investment recipients in Q3 was Generate:Biomedicines in Somerville, Mass. that raised $273 million in its third venture round during September. Earlier this month, Science & Enterprise reported on a demonstration of that company’s generative A.I. technology applied to design of therapeutic proteins, published in the journal Nature.

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