Generative AI start-ups attracted $3.9B investments in Q3 2024
Generative artificial intelligence (AI) start-ups have witnessed a massive rise in venture capital (VC) funding. The investments hit $3.9 billion across 206 deals in the third quarter of 2024, data from funding tracker PitchBook revealed. US-based companies were the biggest beneficiaries of the trend, bagging $2.9 billion through 127 deals. The massive investment shows how confident investors are about the potential of generative AI technology.
Top beneficiaries of funding
Several start-ups emerged as top beneficiaries of the Q3 funding. Coding assistant Magic raised $320 million in August, while enterprise search provider Glean raised $260 million in September. Business analytics firm Hebbia also got a huge $130 million investment in July. Internationally, China's Moonshot AI and Japan's Sakana AI drew huge investments of $300 million and $214 million, respectively.
Generative AI: A promising yet controversial technology
Generative AI, including a variety of technologies such as text and image generators, coding assistants, and cybersecurity automation tools, has ignited debates over its reliability and legality. However, despite the concerns, VCs are hopeful that generative AI will establish a stronghold in profitable industries. A Forrester report indicates that 60% of generative AI skeptics will eventually embrace the technology, for tasks ranging from summarization to creative problem-solving.
Impact on data centers and environment
Generative AI's massive computational needs could push companies to build gigawatt-scale data centers, using as much as 20 times more power than average data centers today. This growing demand for data center power is already prolonging the life of coal-fired plants. Morgan Stanley predicts that if this continues, global greenhouse emissions could triple by 2030 compared to a scenario without generative AI development.
Tech giants turn to nuclear power for data centers
In the face of growing non-renewable energy needs of data centers, tech giants such as Microsoft, Amazon, Google, and Oracle are turning to nuclear power. Back in September, Microsoft announced plans to source power from the Three Mile Island nuclear plant. However, it may take years before these investments bear fruit. Despite possible adverse effects, investments in generative AI start-ups show no signs of slowing down.
