Despite the generative AI boom, the AI sector sees deal volume fall to its lowest level since 2017.
Global funding to AI companies reached $8.3B in Q3’23 — a 12% drop from the previous quarter — while deal count fell 18% to 501, the lowest quarterly level since 2017.
Using CB Insights data, we dig into the latest AI trends, including:
- Global AI funding in Q3’23 drops 12% QoQ to the lowest point in 4 quarters.
- The average AI deal size is up 34% in 2023 YTD, driven by massive mega-rounds.
- Q2’23 welcomes 4 new AI unicorns — including 3 generative AI companies.
- M&A deals decrease by 24% QoQ, while public exits remain subdued.
- Funding to Asia’s AI startups increases by 67% QoQ.
Let’s dive in.
Global AI funding reached $8.3B in Q3’23, a 12% drop QoQ and the lowest level since Q3’22.
AI deals slipped even further, declining by 18% QoQ to 501 — the lowest quarterly level since 2017.
Despite surging interest in AI across sectors, the declines in VC activity suggest investors are focusing their bets on clear market leaders, rather than casting a wide net.
At $26.3M, the average deal size for AI companies in 2023 YTD has grown over a third compared to 2022’s total.
There were 65 M&A deals for AI companies in Q3’23 — down 24% QoQ — cutting the steady growth seen over the previous 3 quarters.
Public exits remained sparse for AI companies with just 3 IPOs in Q3’23, up from 2 the previous quarter.
Globally, the US held the largest share of Q3’23 M&A deals at 40%.
Asia was the only major region to see an increase in AI funding, which jumped to $1B in Q3’23. This was fueled by $100M+ deals to China-based startups Enflame and CloudMinds. Asia-based deals fell 8% QoQ.
Meanwhile, the US and Europe both saw moderate declines in funding, dipping 11% and 25% QoQ, respectively.If you aren’t already a client, sign up for a free trial to learn more about our platform.