AI Startups Raise Record $6.9 Billion in Q1 Before Pandemic Hits
AI startups raise $6.9 billion in Q1 2020, outpacing the broader venture capital market. However, the coronavirus pandemic is expected to sharply slow this record-setting momentum.
AI startups raise $6.9 billion across 285 deals in the first quarter of 2020, easily outpacing the overall U.S. venture capital market. At this record-setting pace, AI funding is on track to surpass the $19.98 billion raised in all of 2019. Venture capitalists eagerly back these machine learning companies as algorithms and data collection methods mature across a wide range of industries.
In contrast to the booming AI sector, the broader venture capital market remains relatively flat with $34.2 billion raised by 2,298 companies. This overall VC funding matches the steady rates seen in 2019 and 2018, which both represent significant leaps above the average rates of the previous decade. The stark difference highlights how artificial intelligence continues to capture the majority of investor interest and financial backing.
Despite this strong early momentum, the coronavirus pandemic is expected to deliver a severe hit to startup funding for the rest of the year. Venture investors currently focus on supporting their existing portfolio companies and ensuring they have enough cash runway to survive the economic downturn. Because venture capital relies heavily on in-person meetings with founding teams, new deal flow is likely to slow significantly as long as shelter-in-place orders remain in effect.