Last year, one out of every three venture capital dollars was invested in artificial intelligence (AI) companies, according to the year-end Venture Monitor from PitchBook and the National Venture Capital Association. While overall startup funding deals and capital invested decreased in 2023 compared to 2022, the AI boom continued to captivate investors. In Chicago specifically, there was a slowdown in investment activity, but it is starting to pick up in 2024. Some key points from the article include:
- Nearly $17 billion, or 10% of the annual deal value, went to AI platforms Anthropic and Open AI nationally
- In Q4 2023, Chicago saw 70 deals worth $480 million, a decrease from $626 million in Q3
- Investors like Hyde Park Angels and Drive Capital Chicago are cautious about investing in AI and are looking for unique use cases and value creation
- Investor discipline from 2023 is expected to continue in 2024, with financing cycles taking longer and companies with strong financial metrics continuing to get funded
- Dry powder, or committed but unspent money, remains in the market, but there may not be an avalanche of interest in deploying it quickly
In general, the article highlights that while VC investing returned to prepandemic levels in 2023, the AI sector remained attractive to investors, and Chicago is seeing some signs of increased investment activity in the new year.
