AI Start Ups Aren’t Finding Investors as Raised Capital Reaches Record Breaking Lows

The past half a decade or so has seen the global economy come to a grinding halt, and it came after an extended period of seemingly unstoppable of economic growth. As per DealRoom, in 2021, around 750 new unicorns were funded, which is a term used to describe a start up that has valuation of over a billion dollars. In 2023, just 16 new start ups have come up in a single quarter, which just goes to show the enormous decline the industry is going through.

With all of that having been said and now out of the way, it is important to note that around 20% of global capital investments have been going towards AI. In spite of the fact that this is the case, many AI start ups are beginning to feel the crunch as well as the once endless supply of funds begins to dry up.

Seven out of the forty three unicorns that have been funded in 2023 so far were AI based startups, which reveals the massive influx of capital that was going into these new companies. All in all, about $84 billion has been invested into venture capital projects in the second quarter this year, which is a staggering 41% decrease year over year.

It appears that investors aren’t too keen on investing in new projects because of the fact that this is the sort of thing that could potentially end up posing too great of a risk. Maintaining and focusing on older investments can help investors earn more profits than might have been the case otherwise, and in the current economic crunch, it seems like the only way to move forward.

Despite the relative lull in seed funding, seven new unicorns have emerged that have enormous potential with all things having been considered and taken into account. They largely consist of neural nets, machine learning algorithms and generative AI, and it will be interesting to see if they are able to continue to receive funding in the future or if the economic crunch ends up depriving them of much needed finance during a critical juncture.

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