State of AI Q3’23 Report

State of AI Global | Q3 2023 Global data and analysis on dealmaking, funding,and exits by private marketAIcompanies Guess Less.Win More. CB Insights helps the world’s leadingcompanies make smarter technologydecisions with data, not opinion. Our Technology Insights Platform providescompanies with comprehensive data, expertinsights, and work management tools thatenable them to discover, understand, andmake technology decisions. ▮▮▮▮IIISign up for a free trialSign up for a free trial Platform Analyst Insights Dive deeper with proprietary informationstraight from tech companies themselves.Learn about what a company does, whothey serve, and how they differentiate fromthe competition. Request a demo Make your brand moresearchable. Findable.Buyable.Partnerable.Investable. Complete a free Analyst Briefing Survey*and get in front of enterprise tech buyers,M&A teams, and investors. *Survey takers have increased their lead generation 3x on average. ▮▮▮▮▮IIIApply hereSign up for a free trial I knew the platform was valuable, but there’s somuch more than just good research. It’s the onlyplatform withreal-time visibility into everyemerging tech market,and it’s become mystarting point for every project. MoranHavivStrategic Innovation, Microsoft Dig Deeper. CB Insights clients can find and trackcompanies using our analyst-curatedExpert Collections. Artificial Intelligence Generative AI Bible: Theultimate guide to genAIdisruption The generative AI in retailmarket map Our Most PopularResearch on Analyzing OpenAI’s investmentstrategy: How the ChatGPTmaker is building a generativeAI ecosystem The Generative AI Market Map:335 vendors automatingcontent, code, design, andmore AI Analyzing a16z’s AI investmentstrategy: How the VC is fundingthe AI global takeover AI 100: The most promisingartificial intelligence startupsof 2023 GenAI 50: The most promisinggenerative artificial intelligencestartups of 2023 The state of generative AI in 7charts TLDRState of AI Your rundown onAIin Q3’23 $26M $8.3B -24% 4 67% AI unicorn births inQ3’23. Average deal sizethis year. Up 34%vs. 2022. Decrease in AI M&Aexits. Increase in fundingQoQ to Asia. Global AI funding. Global AI funding reached$8.3B in Q3’23, a 12% dropQoQ and the lowest levelsince Q3’22. There were 65 M&A dealsfor AI companies in Q3’23,cutting the steady growthseen over the previous 3quarters. Q3’23 saw a total of 4 newAI unicorns. Three ofthese are generative AIcompanies: AI21,ZhipuAI,and Imbue all gainedvaluations of $1B or more. Asia was the only majorregion to see an increasein AI funding, whichjumped to $1B in Q3’23.This was fueled by$100M+ deals to China-based startups EnflameandCloudMinds. Asia-based deals fell 8% QoQ. At $26.3M, the averagedeal size for AI companiesin 2023 YTD has grownover a third compared to2022’s total. AI deals slipped evenfurther, declining by 18%QoQ to 501—the lowestquarterly level since 2017. Public exits remainedsparse for AI companieswith just 3 IPOs in Q3’23,up from 2 the previousquarter. However, the quarter’s 4unicorn births marked adecline from Q2’23, whichsaw 7 new AI unicorns,including Cohere,Synthesia, andReplit. This is driven by the boomin generative AI, withstartups likeOpenAI,Anthropic, and Inflectionraising massive roundsthis year. Despite surging interest inAI across sectors, thedeclines in VC activitysuggest investors arefocusing their bets on clearmarket leaders, rather thancasting a wide net. Meanwhile, the US andEurope both saw moderatedeclines in funding, dipping11% and 25% QoQ,respectively. Globally, the US held thelargest share of Q3’23M&A deals at43%. See the data→ See the data→ See the data→ See the data→ See the data→ ContentsState of AI Investment Trends11Unicorns34Exit Trends40Investors44 Geographic Trends48 US49Silicon Valley55New York59Asia63China68Japan72Europe76United Kingdom81 Global Trends Investment Trends State of AI|Global Trends|Investment Trends Global AI funding hits $33B in Q3’23, on pace to exceed 2020’s level State of AI|Global Trends|Investment Trends QuarterlyAI funding drops 12% QoQ, while deals see an 18% decline State of AI|Global Trends|Investment Trends Asia and US deal shares see slight growth State of AI|Global Trends|Investment Trends VCs continue to be the most active AI investors State of AI|Global Trends|Investment Trends Massive mega-rounds drive the average AI deal size close to 2021’s level State of AI|Global Trends|Investment Trends Asia sees a 9% increase in median deal size in 2023 YTD State of AI|Global Trends|Investment Trends Only angel investors see median AI deal size tick up vs. 2022 State of AI|Global Trends|Investment Trends $100M+ mega-round deals and funding dip slightly QoQ State of AI|Global Trends|Investment Trends State of AI|Global Trends|Investment Trends The US sees 2 fewer mega-rounds than last quarter State of AI|Global Trends|Investment Trends Over half of AI funding comes from mega-rounds