Artificial intelligence startups have significantly contributed to the recovery of U.S. venture capital funding, which rose nearly 30% in 2024 compared to the previous year.
AI companies captured a record 46.4% of the $209 billion raised, a notable increase from less than 10% a decade ago, driven largely by technologies like OpenAI's ChatGPT.
Major funding rounds, including $6.6 billion for OpenAI and $12 billion for Elon Musk's xAI, reflect strong investor optimism about AI's potential. However, concerns persist regarding the sustainability of this enthusiasm, particularly for capital-intensive foundation model firms.
Despite AI's significant role, the overall venture capital landscape faced challenges, with $76 billion raised in 2024—the lowest in five years. Exit values increased to $149.2 billion from $120 billion in 2023, but remained substantially below the $841.5 billion peak in 2021.
The IPO market showed slow recovery, although some listings like ServiceTitan offered a glimmer of hope. Analysts anticipate improved exits in 2025, bolstered by tech-friendly policies from the incoming administration of U.S. President-elect Donald Trump.