Venture-capital funding is trending down as investors look ahead at the gloomy economic conditions, but artificial-intelligence (AI) funding remains the exception.
Key Details
- In February, global monthly funding dropped to $18 billion, the lowest amount since February 2020, Crunchbase found.
- Funding was down about 63% compared to last year. Month over month, funding declined 43%.
- In January, funding levels increased, largely caused by increased funding in OpenAI.
- Late-stage funding saw the largest decline, falling 73%. Meanwhile, early-stage funding dropped 52%.
- Today’s collapse of Silicon Valley Bank is likely to lead to less funding in the sector.
- However, the declining investment has not started affecting AI startups as companies like Envisics, Consensus, and Anthropic continue to raise hundreds of millions in funding.
Why it’s news
AI-focused startups are continuing to attract attention and gain funding from venture capitalists, despite decreased funding in other sectors.
Over the last decade, investors have enthusiastically poured capital into venture funds as investors assumed they would bring about more immediate returns than other assets. With so much funding available, startup investors were able to raise multibillion-dollar funds for startups.
But now, venture-capital firms are slowing the pace at which they distribute their funding. Several are still skittish after tech startups began to struggle last year. High interest rates, lower stocks and valuations, and fewer public exits mean limited partners haven’t had as many opportunities to back new endeavors
A UK-based auto startup called Envisics recently announced that it had raised more than $50 million in funding. The startup is working to develop holographic in-car technology that will apply to safety, navigation, and heads-up displays.
This round of funding comes from several key backers, including Hyundai Mobis, InMotion Ventures, and Stellantis. Even as other startups struggle to gain traction, Envisics says it is in talks with other investors to increase its funding, TechCrunch reports. Envisics’ valuation is nearing $500 million.
An interactive video demo platform Consensus recently announced an additional $110 million in funding from Sumeru Equity Partners. The recent funding boost will help the company further develop its reusable interactive videos applicable across broad industry groups. The company now has a total of $139 million in funding since launching in 2013, TechCrunch reports.
A direct rival to OpenAI, Anthropic is quickly raising hundreds of millions of dollars in funding from backers such as Google. Google reportedly invested $400 million in the startup just a few weeks ago, and now the startup is raising another $300 million in another round of investing. Anthropic already has a valuation of $4.1 billion, Crunchbase reports.