AI startups have become the new darlings for venture capital firms and investors worldwide! The AI-hype is not slowing down as groundbreaking AI technologies and startups continue to emerge on to the scene.
With all the complex problems that AI startups are promising to solve and the swarm of investor activity in the space, it can be helpful to understand which investors are leading the charge in AI investments and where the artificial intelligence industry is headed.
To do this, we looked at all the AI funding rounds on Crunchbase between the period 2010 to Sep 2024.
This article breaks down the biggest AI investors across three key categories: top AI investors – overall, most active AI seed round VC investors, and top AI investors at Series A stage.
Biggest AI Investors – Overall by Volume
1. Techstars
Overview: Techstars is a leading pre-seed venture capital firm, investing in a diverse, global pool of entrepreneurs and high-growth companies
What does Techstars say about AI?: Kerty Levy, managing director for Techstars Boston Accelerator mentioned that they “ask every founder who comes through Techstars to tell me what their AI strategy is”. This shows the important that VC funds are placing on artificial intelligence while investing into a startup.
Geographical focus: Global
Investment Criteria:
- Typical ticket size: $120k – $4M
- Stake: Up to 9%
2. YCombinator
Overview: Y Combinator is a technology startup accelerator and venture capital firm launched in March 2005 which has been used to launch more than 4,000 technology companies, supporting startups leveraging technology across various sectors
Their AI strategy and programs: YCombinator has announced they will experiment with a vertical group in YC dedicated to AI companies in one of their upcoming batches. This is being done by YCombinator to aid more innovation in the artificial intelligence sector. They also plan to provide AI founders with access to proprietary datasets and computing infrastructure if the experiment batch is successful.
Geographical focus: Global
Investment Criteria:
- Typical ticket size: $500k
- Stake: 7% (The YC Standard Deal)
3. Google for Startups
Overview: Google for Startups is a startup program launched by Google in 2011. It consists of over 50 co-working spaces and accelerators in 125 countries, and provides hands-on lessons for aspiring entrepreneurs
Google’s AI startup program: Startups leveraging AI as their core technology are invited to apply for the AI Startup Program at Google. This program offers exclusive opportunities, including webinars and live Q&A sessions with Google Cloud AI product managers, engineers, and developer advocates.
Geographical focus: Global
Investment Criteria:
- Typical ticket size: Varies
- Stake: N/A
4. MassChallenge
Overview: MassChallenge is a global, zero-equity startup accelerator which connects startups, experts, corporations, and communities to grow and transform businesses and economies.
MassChallenge’s offer for AI founders: MassChallenge teamed up with IBM to announce a cohort of 50 startups for a new mentorship program dedicated to cultivating early-stage entrepreneurs from underrepresented identities who are leveraging AI as part of an innovation solution.
Geographical focus: Global with USA focus
Investment Criteria:
- Typical ticket size: Varies
- Stake: N/A
5. Insight Partners
Overview: Insight Venture Management, LLC is a global venture capital and private equity firm that invests in high-growth technology, software, and Internet businesses.
Their comments and views on AI: George Matthew, partner at Insight Partners has said at industry events and interviews that “generative AI models have raised the bar that will reformat all of software”.
Insight Partners organizes an annual conference called ScaleUp:AI that invites leaders, decision-makers, and businesses from different walks of technology such as AI, healthcare, cybersecurity, software. and more.
Geographical focus: Global
Investment Criteria:
- Typical equity ticket: $3M – $500M
- Stake: Can vary from a seed stage investment to a full-buyout
6. Antler
Overview: Antler is the world’s day zero investor, enabling exceptional founders to build startups and great companies, from the very beginning.
According to Antler, in their portfolio, there are at least 100 companies that leverage AI to solve complex, meaningful, and pervasive problems
Geographical focus: Global
Investment Criteria:
- Typical ticket size: Varies
- Stake: 7% and above, up to 12.5% in seed rounds
7. Venture Kick
Overview: Venture Kick is a philanthropic three stage funding model initiated to support Swiss startups with enough funding to kick-start their entrepreneurial success.
Geographical focus: Switzerland
Investment Criteria:
- Typical ticket size: Up to $1M
- Stake: N/A
8. SOSV
Overview: SOSV is a venture capital firm that provides pre-seed, seed, Series A and later stage funding to deep tech startups that join its startup development programs.
Geographical focus: Global with USA focus
Investment Criteria:
- Typical ticket size: Up to $5M
- Stake: Mostly SAFE investments (Simple agreement for future equity)
9. Andreessen Horowitz
Overview: Andreessen Horowitz (aka a16z) is a stage-agnostic venture capital firm that backs bold entrepreneurs building the future through technology across AI, healthcare, crypto, consumer, fintech, enterprise, and more.
Their focus on AI: Andreessen Horowitz has 100+ AI companies in their portfolio. The VC firm raised the biggest VC fund of 2024, worth $7.2 billion. Out of this, $2.25 billion would be allocated to invest in AI start-ups building AI infrastructure and applications.
Geographical focus: Global
Investment Criteria:
- Typical ticket size: Up to $100M
- Stake: Varies
10. Sequoia
Overview: Sequoia Capital is an American venture capital firm headquartered in Menlo Park, California which specializes in seed stage, early stage, and growth stage investments in private companies across technology sectors.
Sequoia’s comments on AI investing: David Cahn, partner at Sequoia Capital speaks about AI and says that “a huge amount of economic value is going to be created by AI. Company builders focused on delivering value to end users will be rewarded handsomely. The road ahead is going to be a long one. It will have ups and downs. But almost certainly it will be worthwhile”.
Geographical focus: Global
Investment Criteria:
- Typical ticket size: Up to $200M
- Stake: Varies
Top Seed AI Investors
At the seed stage, the most active AI venture capital firms are focused on identifying companies that can bring about the next wave of disruptive AI models but currently have limited traction.
Most of the ideas at seed stage revolve around different segments of AI such as generative AI, machine learning, natural language processing tool, deep tech, etc.
Seed round investors in AI are often the first institutional backers of companies, and they take on higher risks in exchange for the potential of outsized returns.
Top Series A AI Investors
By the time AI startups reach Series A funding, they typically have a viable product and some traction, making them a safer bet than early stage companies at the seed stage. However, Series A investors, often venture capital firm based in tech hubs like Silicon Valley, still look for companies with exponential growth potential.
AI Company Valuations
In our research about AI Valuation Multiples, the median EV/Revenue multiple for AI companies was 25.8x. However, given the artificial intelligence space is a relatively new as well as capital-intensive segment of technology, majority of the deals were concentrated in capital raisings rather than traditional exits.
Top AI venture capital firms have a significant influence on AI company valuations, driving trends and shaping the investment landscape.
It’s important to note the valuation multiples are much higher in capital raising transactions than in 100% sales. The sample used in our research also includes the largest and most successful companies, so founders looking to sell their AI startups should take this data with a grain of salt. The valuation multiple will likely be significantly lower in the sale offer you receive.
Why Venture Capital Firms Invest in AI
Venture capital firms invest in AI for a variety of compelling reasons:
High Returns on Investment: AI has the potential to disrupt numerous industries and create new markets, making it an attractive investment opportunity. The promise of high returns drives venture capitalists to back AI startups with innovative solutions.
Growing Demand for AI Solutions: As AI technology continues to advance, the demand for AI solutions is growing rapidly. This burgeoning market presents lucrative opportunities for venture capital firms to invest in AI startups that can meet this demand.
Strategic Partnerships: Investing in AI startups allows venture capital firms to form strategic partnerships and gain access to cutting-edge technologies and new markets. These partnerships can provide a competitive edge and drive further innovation.
AI Valuation Mutliples
Potential for Exits: Venture capital firms often invest in AI startups with the goal of eventually exiting through an acquisition or IPO. Successful exits can yield substantial returns, making AI startups an attractive investment target.
Have you received an offer for your AI company?
Congratulations on receiving an offer! It’s a testament to your hard work. Enjoy the moment, but don’t rush into a decision—first offers are rarely the best.
Having an AI M&A advisor by your side can streamline the transaction process and help you achieve a better valuation. Advisors bring expertise, strategic guidance, and networks to ensure you get the best deal. Without professional support, you risk being at a disadvantage, as having only one bidder limits your negotiating power.
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