AI boom propels US venture capital funding to new heights
In Q2 2024, US venture capital funding surged to $55.6 billion, led by AI investments. Exits fell to $23.6 billion, and emerging fund managers raised $37.4 billion, mostly from large firms.
US venture capital funding soared to $55.6 billion in the second quarter of 2024, marking the highest total in two years, largely driven by significant investments in AI companies such as Elon Musk’s xAI and CoreWeave. The funding kickstart represents a 47% increase from the first quarter, reflecting growing investor enthusiasm for AI technology.
The surge follows a period of declining US VC funding, which had fallen to $35.4 billion in the second quarter of 2023 amid high interest rates and a sluggish exit market. The recent influx of capital into AI startups has reversed this trend, encouraging more investments in AI foundation model companies and applications ranging from code generation to productivity tools.
Despite the rise in funding activity, exits remain challenging, with second-quarter exits valued at $23.6 billion, down from $37.8 billion in the first quarter. The initial public offering market has struggled to gain momentum, even with some VC-backed companies like Rubrik going public.
Emerging venture capital fund managers are also under pressure, raising only $37.4 billion in commitments this year, dominated by large firms such as Andreessen Horowitz. For venture capital returns to improve, large tech companies need to increase their public listings, according to PitchBook analyst Kyle Stanford.
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