OpenAI recently secured $6.6 billion in funding at a valuation of $157 billion, but it’s far from the only AI company with high fundraising potential. Investors poured $2.9 billion from July to September (Q3) of 2024 into the latest U.S.-based AI startups, per PitchBook data.
The three startups in the U.S. that received some of the most funding were software development AI startup Magic, enterprise ChatGPT startup Glean, and AI document search startup Hebbia, per TechCrunch. The three raised $320 million, $260 million, and $130 million respectively in the third quarter.
Magic is creating AI that can write code and Glean is working on an AI search app for businesses. Hebbia focuses on AI agents for finance, law, and big companies.
An earlier PitchBook report from August shows that investor interest in AI is long-term and extends beyond the last quarter. The report showed that AI comprised 41% of U.S. VC deals in the first half of 2024, with $38.6 billion of the $93.4 billion total in VC deals going to AI startups.
Related: AI Startups Raised $50 Billion Last Year, But Some Investors Are Starting to Pass — Here’s Why
Going back further to last year, AI was one of the few industries with the most growth in unicorn startups, or businesses with a valuation over $1 billion. In an otherwise tough fundraising year, the number of AI unicorns grew by 22.9%.
Even as it presents opportunities, AI carries its own unique set of challenges. For one, the cost of developing an AI model is high. Anthropic CEO Dario Amodei stated in July that it would take $10 billion to train AI “better than most humans at most things.” He estimated that AI companies would reach that point within the next three years and that now it takes about $100 million to train an AI model.
AI also has a hefty electric bill. Microsoft, Google, and other big tech companies are turning to nuclear power as a source of carbon-free energy; AI helped increase Google’s greenhouse emissions by 48% within four years.
Still, AI remains an area of high interest among founders. 156 out of the 208 startups accepted to the summer class of Y Combinator, an acclaimed startup accelerator, focused on AI.
Related: Y Combinator Helped Launch Reddit, Airbnb and Dropbox. Here’s What I Learned From Its Free Startup School.
One startup founder not affiliated with Y Combinator, Sahil Agarwal of AI safety startup Enkrypt AI, talked to Entrepreneur earlier this year about the dangers and opportunities AI poses.
“What ChatGPT did is it made AI real for everyone,” he said.
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