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AI startups in the United States raked in an unprecedented $97 billion in funding last year. That’s nearly half of the $209 billion raised by all US startups in 2024. It’s a big number—biggest ever—and it’s no surprise when you consider the names driving it: xAI, OpenAI, and Anthropic. The broader startup ecosystem saw a mixed bag. Sure, total funding rose by a third compared to 2023, but not everyone’s eating at the same table. Venture capital funds raised $76.1 billion across 508 funds, the lowest numbers seen in years. Some companies are swimming in cash, while others are scraping by. And if you’re an old-school enterprise software startup? Forget it. AI is hogging all the attention and the money. The AI frenzy Multibillion-dollar rounds are the new normal in AI. Training foundational models—those massive data-crunching beasts at the heart of AI applications—requires obscene amounts of capital. Smaller venture firms? They’re out of the race at that level. Giuseppe Stuto, co-founder of 186 Ventures, said, “Smaller VCs can’t compete here. They’re better off chasing applications that spin off from these models.” And those applications are popping up everywhere. From privacy tools to niche industries like legal tech, smaller firms are finding their sweet spot. Some experts see opportunity in these adjacent layers. Smaller startups with big ideas and less capital are thriving in these spaces. Globally, though, things look a little grim. Europe saw funding for startups drop to $61.6 billion in 2024, down from $66.7 billion in 2023. In Asia, the fall was even worse — $75.9 billion, compared to $100.1 billion the year before. The US, meanwhile, flexed hard. Its share of the pie just keeps getting bigger. Big tech flexes harder Meanwhile, tech giants are out here flooding the market. Alphabet rolled into CES 2024 with its…

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Filed under: News - @ January 7, 2025 7:21 am