Tech
AI deals lift US venture-capital funding to highest level in two years
![AI deals lift US venture-capital funding to highest level in two years AI deals lift US venture-capital funding to highest level in two years](https://cdn.i-scmp.com/sites/default/files/styles/og_image_scmp_generic/public/d8/images/canvas/2024/07/03/0b9a1fbc-a9bc-46e8-be3e-5237d8898b4e_6ac3bd21.jpg?itok=lX9b-Eld&v=1719987675)
Investors’ ongoing excitement around building and adopting AI technology, which could potentially bring significant returns, has fuelled the recovery of VC funding.
After reaching a record high US$97.5 billion in the fourth quarter of 2021, US VC funding had been steadily declining. It hit a recent low of US$35.4 billion in the second quarter of 2023, amid a high interest rate environment and a sluggish exit market.
The recent influx of capital into AI start-ups has reversed the downward trend, prompting more investors to double down on companies involved in AI foundation models, as well as applications from code generation to productivity tools.
Despite the increase in deal activity, exits remain challenging, the data shows, as small deals generated about US$23.6 billion in exit value in the second quarter this year, down from US$37.8 billion in the first quarter.
“For VC returns to see an increase, large tech companies must begin to list publicly at a higher pace than we have seen through the first half of the year,” PitchBook analyst Kyle Stanford said in a statement.