State of AI Q2’23 Report

State of AI Global | Q2 2023 Global data and analysis on dealmaking, funding,and exits by private market AI companies 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 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. 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 here 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. Moran HavivStrategic Innovation, Microsoft Dig Deeper. CB Insights clients can find and trackcompanies using our analyst-curatedExpert Collections. Artificial Intelligence The Generative AI Market Map:335 vendors automatingcontent, code, design, andmore The generative AI in retailmarket map Our Most PopularResearch onAI Analyzing OpenAI’s investmentstrategy: How the ChatGPTmaker is building a generativeAI ecosystem AI 100: The most promisingartificial intelligence startupsof 2023 Analyzing a16z’s AI investmentstrategy: How the VC is fundingthe AI global takeover Generative AI is churning outunicorns like it’s 2021 The state of generative AI in 7charts TLDRState of AI Your rundown onAI in Q2’23 $29M $9.4B 13% 7 AI unicorn births inQ2’23. An increaseof 40% QoQ. 13x Global AI funding. Increase in fundingQoQ to Canada. Increase in AI M&Aexits. Average deal sizethis year. Up 48%vs. 2022. Global AI funding — whichspiked in Q1’23 due toOpenAI’s $10B round — fellto $9.4B in Q2’23, a 38%drop quarter-over-quarter(QoQ). There were 86 M&A dealsfor AI companies in Q2’23,continuing the steadygrowth seen over the last 3quarters.Public exits remainedsparse for AI companieswith just 2 IPOs in Q2’23,consistent with Q1’23.Globally, the US held thelargest share of Q2’23exits at 35%, with Europefollowing closely at 33%.See the data→ Canada saw the greatestincrease in AI fundingamong regions, surgingover 1,000% QoQ to reach$693M in Q2’23. AI dealcount also jumped 35% to23, the region’s highestlevel in 4 quarters.Meanwhile, Asia andEurope saw more modestupticks in funding, growing29% and 20% QoQ,respectively.See the data→ Q2’23 saw a total of 7 newAI unicorns — 2 more thanthe previous quarter.Generative AI accountedfor 5 of the entrants to theunicorn club, with Cohere,Replit, Runway, Synthesia,and Typeface all gainingvaluations of $1B or more.See the data→ At $29M, the average dealsize for AI companies in2023 YTD has grownnearly 50% compared to2022’s total. However, if excludingOpenAI’s January mega-round, Q2 funding would’vegrown 81% QoQ. This has been partly drivenby the boom in generativeAI, with startups likeInflection, Cohere, OpenAI,and Anthropic raisingmassive rounds this year.See the data→ Deals to AI startups tickedup for the first time in 5quarters to reach 590 inQ2’23. Over 40% of thesewent to US-based startups. See the data→ ContentsState of AI Global Trends10 Investment Trends11Unicorns34Exit Trends40Investors44 Geographic Trends48 US49Silicon Valley55New York59Canada63Asia69China74Japan78Europe82United Kingdom87Germany91 Global Trends Investment Trends State of AI| Global Trends | Investment Trends 2023 AI funding could exceed last year’s level at this pace, though dealsare lagging State of AI| Global Trends | Investment Trends Quarterly AI funding drops 38% QoQ but remains on par with Q4’22, whiledeals tick up State of AI| Global Trends | Investment Trends 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 In 2023 so far, the average AI deal size rivals 2021 levels, driven bymassive mega-rounds State of AI| Global Trends | Investment Trends Asia and Canada each see $1M increases in annual median deal size State of AI| Global Trends | Investment Trends Median deal size is down across all investor groups except angels State of AI| Global Trends | Investment Trends Q2’23 mega-round deals are up nearly 3x while funding is slashed in half State of AI| Global Trends | Investment Trends State of AI| Global Trends | Investment Trends US mega-rounds triple QoQ State of AI| Global Trends | Investment Trends Just over half of AI funding comes from m