Huge deals are pushing more AI startups into IPO territory

Venture investors are betting that AI-focused startups are ready for the public markets, making more, larger, earlier bets on such companies.

It’s a great time to raise capital if your startup is building with — or on top of — artificial intelligence, regardless of how far along you are toward an exit. While many startup niches have seen their funding tallies rise in 2021, AI startups appear to be enjoying strong gains across younger and older cohorts, implying a broad base of customer demand.

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New data from CB Insights details a global AI funding market replete with activity, sharply divided by geography.

This morning, we’re making sense of the numbers with help from Sapphire Ventures partner Jai Das and Glasswing Venture partners Rudina Seseri, two of our regular check-ins when it comes to AI investing.

First, we’ll dig into the data to understand where capital is flowing today in the AI startup market. Then we’ll talk about why both early- and late-stage bets on AI startups are so very popular today.

Record venture demand

In the third quarter of 2021, investors poured $17.9 billion into global AI startups, CB Insights reports. The amount of money raised by the cohort of companies has risen every quarter since Q1 2020, when AI startups raised a local minimum of $6.3 billion.

But what makes Q3 2021 more than just another quarter of strong fundraising results from AI startups is a dramatic rise in deal volume.