PYMNTS. AI fueling American venture funding, highest in two years
American venture funding has reached its highest quarterly total in two years.
PYMNTS recently reported on a Reuters article, citing Pitchbook numbers that show the second quarter of 2024 venture funding came in at a staggering $55.6 billion.
The article goes on to say that the amount represents a 47% jump from the $37.8 billion raised by U.S. startups in the first quarter, driven primarily by significant investments in artificial intelligence (AI) companies, including $6 billion secured by Elon Musk’s xAI and $1.1 billion by CoreWeave.
PYMNTS recently reached out to 555vCTO.com founder Vaclav Vincalek to get his thoughts on the amount of investment going into AI infrastructure.
Rise in AI infrastructure investments
Over the last few months, Big Tech companies have invested heavily in AI infrastructure. For example, Microsoft is spending $3.3 billion to establish a data hub in Wisconsin. What’s it for? To teach employees and manufacturers how to optimize the use of AI.
Vincalek says all this investment in AI infrastructure will eventually lead to more accessible AI capabilities.
“Assuming the infrastructure gets built, companies would have access to more advanced AI capabilities,” tech analyst Vaclav Vincalek told PYMNTS. “For example, more sophisticated machine learning algorithms can help analyze larger and larger datasets in shorter time frames. Or improved natural language processing to better serve customers with AI.”
Venture capital (VC) investments for the second quarter came to $55.6 billion, Reuters reported Wednesday (July 3), citing data from PitchBook.
Increase in AI investments is a recovery for VC funding
The trend, Reuters notes, marks a recovery for VC funding, which hit a record $97.5 billion in the U.S. in the closing quarter of 2021 and a record low of $35.4 billion in the second quarter of 2023.
Interest rate hikes and IPOs and M&As slowed down, which were to blame for the record low quarter.
PYMNTS interviewed other experts who said there are signs that point to investors growing increasingly picky about the AI projects in which they invest. AI stocks have fallen, and one expert cautioned against what amounts to AI-washing, commenting that simply saying “AI” 15 times isn’t going to cut it for a company.
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