Venture capital investment in Generative AI almost doubles globally ...
Investor enthusiasm for Generative AI (GenAI) continues to grow, with venture capital investment in the sector expected to top $45bn globally for the year, almost double the figure for 2023 ($24bn) and more than five times the total VC investment in 2022 ($8.7bn). That’s according to EY Ireland’s Generative AI Key Deals and Insights Report, which analyses deals, investments, and trends in this rapidly growing sector.
Genesis of GenAI Investment
The majority of GenAI investment to date continues to be located in North America. However, there are a growing number of European Unicorns and a significant opportunity for Ireland to establish itself as a GenAI hub. VC activity in GenAI has been growing exponentially since the release of OpenAI’s ChatGPT in late 2022, and this year has seen a record surge in funds invested.
Trends and Analysis
EY Ireland forecasts that venture capital investment in Generative AI will exceed $45bn globally for the year, with more than 1,050 separate investments by the end of November. Notable transactions in 2024 include Open AI’s $6.6bn funding round in October, Mistral AI’s $651m round in June, xAI’s $5bn round in May, Waymo’s $5bn round in July, Glean’s $260m round in September, and Moonshot AI’s $300m round in August. Another noticeable trend has been the change in strategy on the part of VCs, favoring more established companies over riskier start-ups.
Global Landscape of GenAI Investment
The United States and North America continue to dominate both investment flows and the number of Unicorn startups, with Europe and EMEA following behind. While Ireland has not seen significant VC investment in GenAI to date, it remains an attractive location for such investments.
Future Outlook
EY Ireland highlights the potential for GenAI to grow from $40bn in 2022 to €1.3 trillion by 2032. The high adoption rates of AI by organizations, falling model training costs, and the growth of vertical AI in specific industries are contributing to the surge in investment in 2024.
Eoin O’Reilly, Partner and Head of AI and Data at EY Ireland, emphasizes the transformative nature of AI, predicting a fundamental transformation of organizations, business models, and value creation underpinned by AI in the coming decade.
Conclusion
As interest in AI, especially GenAI, remains strong, backed by stellar early adoption rates and potential applicability across various sectors, the future of GenAI investment looks promising with a shift towards niche and specific vertical AI investments projected to increase in the years to come.
