According to Crunchbase data, global venture capital decreased by 18% quarter over quarter in Q2 2023 to $65 billion. In the second quarter of 2022, startup investors contributed $127 billion, which is a 49% decrease.
The first half of 2023 has a similar decline. Global funding fell to $144 billion in the first half of 2023 from $293 billion in the first half of 2022, a 51% reduction, and a 10% decline from the second half of 2022.
Throughout the world, startup investors slowed down their pace in the second quarter of 2023. Three significant events in H1 were present despite the slowdown: Large rounds to AI-driven startups are sponsored by venture firms and corporate investors like Microsoft, Nvidia, and Google; Databricks’ acquisition of language model training platform MosaicML for $1 billion; the steep stock market rise of Nvidia, whose chips fuel much of the processing required to train big language models. The biggest takeaway from the significant funding is that AI wants to grab it all.
It is clear. AI does not have trouble obtaining funding. With the debut of OpenAI, the boom began. Since then, San Francisco-based Adept AI has raised $350 million in Series B funding at a reported post-money valuation of at least $1 billion; ChatGPT rival Anthropic, which has an AI assistant named Claude, raised $450 million in Series C funding in May; CoreWeave, OpenAI, Cohere, Builder.ai, and Runway have also raised funding.
A significant $1.3 billion financing was headed by Microsoft, Reid Hoffman, Bill Gates, Eric Schmidt, and new investor Nvidia in June for the “personal AI” startup Inflection AI. According to Forbes, the round valued Inflection AI at $4 billion.
Despite the global rise, artificial intelligence is still in its infancy in Africa due to several issues. However, the industry, like the region’s entire tech sector, is starting to steadily pick up.
AI has become more significant as a result of the development of learning algorithms like deep learning, chatbots, and neural networks, which enable the software to improve itself by learning from experience. Along with fresh financing, these innovations are gradually lifting the curtain on the AI Sector.
Businesses or their venture capital sections have made Africa’s most recent investments in AI. Among the major stakeholders are General Catalyst, Tiger Global, Sequoia Capital, and other renowned investors like Spark Capital and Greylock Partners.
Africa and the Middle East are expected to have the highest rise in AI spending globally, with projected totals of $6.4 billion by 2026 and $3 billion (£2.4 billion) this year. We have already witnessed advancements in a variety of sectors, including agriculture, healthcare, education, and more since Google built its first AI research center in Africa in Accra in 2019.
Contrary to popular belief, Africa is not only a consumer of artificial intelligence (AI), but also an innovator in the field. The lively and dynamic character of Africa’s AI ecosystem is illustrated by the numerous examples of African tech entrepreneurs, companies, and researchers pushing AI innovation.
These inventions, which address regional issues and promote community development, range from chatbots that offer legal guidance in Uganda, and the influx of data centers in South Africa and Namibia to AI-powered medical diagnostics systems in Nigeria.
As seen by the OpenAI round, VCs were not the only ones intrigued by the new technology. Large businesses and their venture capital divisions, such as Google, Zoom Ventures, Nvidia, Oracle, and Salesforce Ventures, also poured money into the sector, demonstrating the technology’s rapid uptake.
Financing for AI appears to be pouring in from all directions in this most recent round. Firms are investing billions of dollars into their own AI research and the development of AI-related products, governments, particularly in China, are backing businesses at increasingly eye-watering prices, and venture capital funds are rising to levels unseen since the previous VC bubble.
We wonder if AI is trying to take it all, as its use cases have been growing for a while. The introduction of ChatGPT and GPT-4 has made the category more fascinating than ever. The increased interest in generative AI firms is due to both the general interest in AI and the significant ChatGPT disruption.
A McKinsey poll conducted in 2022 found that the use of AI had more than doubled over the previous five years and that firms were adopting twice as many AI capabilities, such as computer vision and natural language generation, at that time. Additionally, it claims that there has been an increase in global investment in AI.