US dominates AI funding, but Europe shows rapid growth
Generative AI companies are driving major investments in the tech sector, accounting for 40% of the $79.2 billion projected for 2024.
Funding for AI and cloud companies in the United States, Europe, and Israel is experiencing a resurgence, after three years of decline, and is expected to reach $79.2 billion by the end of 2024, according to venture capital firm Accel. This marks a 27% increase compared to the $62.5 billion invested in 2023. Generative AI is playing a major role, accounting for around 40% of this year’s investments.
Of the $56 billion invested in generative AI over the past two years, 80% went to US-based companies, with the remainder split between Europe and Israel. In the US, OpenAI, Anthropic, and Elon Musk’s xAI led funding rounds, while Europe saw significant investment in companies like Mistral, Aleph Alpha, and DeepL. AI foundation models attracted two-thirds of the total AI investment during this period.
Generative AI investment in Europe is growing quickly, rising from $2.4 billion in 2023 to $6.4 billion in 2024. By comparison, the US saw $25 billion in funding for private AI companies in 2024. Accel noted, however, that outside of AI, the focus in the tech industry has shifted towards profitability, signalling the end of an era of high growth in software.
Despite the shift, the booming AI sector is seen as transformative, with Accel partner Philippe Botteri comparing the current AI wave to other major technological shifts like the rise of broadband, mobile, and cloud computing.
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