Data reveals dip in generative AI funding

9 Oct 2023

Image: © nicoletaionescu/

Pitchbook data for the third quarter shows that the number of generative AI deals has fallen by nearly a third.

While generative AI has been all the rage this year, new data shows that some of the hype around the trailblazing technology may be dying down as investor interest wanes.

The latest data from Pitchbook shows that the number of generative AI deals has fallen by nearly a third to 101 rounds in the third quarter of this year.

The value of individual deals has also been ebbing, saved only by the up to $4bn investment by Amazon into Anthropic which brought the total funding value in the latest quarter to $6.1bn.

Anthropic was co-founded by former OpenAI employees in 2021 and is based in San Francisco. It’s Claude series of large language models are in direct competition with OpenAI’s GPT models.

“Momentum is definitely waning as the market comes back to earth,” Bryan Offutt, a partner at Index Ventures, told Pitchbook. “We are living in the messy middle of AI.”

According to Offutt, while generative AI technology is still impressive, it is not yet reliable enough for most use cases.

Earlier this year, Crunchbase data showed that while European VC funding in the second quarter of 2023 was significantly lower than last year, start-ups developing artificial intelligence saw a boost, not least helped by a gold rush surrounding generative AI.

According to the data, European AI companies raised $1.5bn in the second quarter, representing 12pc of the continent’s total funding.

This generative AI boom has been seen on both sides of the Atlantic. In May, OpenAI raised more than $175m to invest in other AI start-ups through its Startup Fund I. The amount marks a 75pc jump over the $100m it had initially said it raised in May 2021, when the Microsoft-backed fund was first launched.

Big players in the space such as Nvidia have been investing heavily into AI start-ups and scale-ups. In August, Nvidia helped Israeli start-up AI21 Labs raise $155m. And just last month, San Francisco-based Databricks was valued at $43bn after Nvidia backed a funding round.

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Vish Gain is a journalist with Silicon Republic