OpenAI was provided recently 6.6 billion dollars in funding at a $157 billion valuation, but it's far from the only AI company with high fundraising potential. Investors poured $2.9 billion from July to September (Q3) 2024 into the latest US-based AI startups, for PitchBook data.
The three US startups that received some of the largest funding were software development startup Magic, enterprise ChatGPT startup Glean and AI document search startup Hebbia, according to TechCrunch. The three collected $320 million, $260 million and $130 million respectively in the third quarter.
Magical is creating AI that can write code and gather is working on an AI search application for businesses. Hebbia focuses on AI agents for finance, law and large companies.
A previous PitchBook report from August shows that investor interest in AI is long-term and extends beyond the last quarter. The report showed that AI accounted for 41% of US VC deals in the first half of 2024, with $38.6 billion of the total $93.4 billion 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 biggest growth in unicorn startupsor businesses with a valuation over $1 billion. In another tough year for fundraising, the number of AI unicorns grew by 22.9%.
Although 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 declared in July that it would take $10 billion to train AI “better than most people at most things.” He estimated that AI companies would reach that point within the next three years, and that it now takes about $100 million to train an AI model.
HE also has a hefty electric bill. Microsoft, Googleand other major technology companies are turning to nuclear power as a carbon-free energy source; HE helped grow Google greenhouse emissions by 48% within four years.
However, AI remains an area of high interest among founders. 156 out of 208 startups was accepted into the summer class of Y Combinator, a popular startup accelerator focused on AI.
A startup founder not affiliated with Y Combinator, Sahil Agarwal of AI security startup Enkrypt AI, spoke to Entrepreneur earlier this year about risks and opportunities HE owned.
“What ChatGPT did is it made AI real for everyone,” he said.