Eye On AI: October Shows Sector’s Crazy Venture Totals Still Abound

This column is a look back at the week that was in AI. Read the previous one here.

While it was not shocking to see AI as the leading sector in October’s venture funding numbers, it was intriguing to see the sector also had its second-strongest fundraising month of all time.

Last month, AI-related startups raised $12.2 billion in funding — per Crunchbase data — or 38% of total monthly venture funding globally. That is only behind May of this year, when similar startups raised a whopping $12.8 billion led by Elon Musk’s generative AI startup, xAI, raising a $6 billion Series B round at a $24 billion valuation.

Similarly, last month also had a really big round — OpenAI’s long-awaited raise of $6.6 billion at a post-money valuation of $157 billion — but it seems almost every month has a really big AI raise.

Additionally, even eliminating OpenAI’s massive round, October’s numbers still mean AI startups raised more than $6.6 billion last month. That number is all the more impressive when one considers in August and September AI startups raised only $8.7 billion combined.

October’s venture dollar amount easily bested September’s nearly $4.3 billion raised, despite the fact September saw more than 100 more AI related rounds — 522 in September compared to 413 in October.

Perhaps not surprisingly, one of the reasons for the higher dollar figure despite fewer rounds was likely the plethora of huge nine-figure rounds in October. Last month saw 11 deals of $100 million or more, compared to only 13 in August and September combined.

Some of the biggest rounds (aside from OpenAI) included:

AI coding startup Poolside raised a $500 million Series B led by Bain Capital Ventures at a reported $3 billion valuation.
Lightmatter, a startup that uses light to link chips together and to do calculations for the deep learning necessary for AI, locked up a $400 million Series D led by new investor T. Rowe Price at a $4.4 billion valuation.
Conversational AI startup Sierra raised $175 million this week in a funding round led by Greenoaks Capital that gave it a $4.5 billion valuation.

The dollar number along with the variety of AI startups raising money — from coding to chips to conversation AI — seems to show that August’s and September’s little lull in AI funding was just a brief interlude before another VC eruption.

It’s been nearly two years since the world fell into its current AI craze and October shows there is no end in sight. In AI, even when numbers seem to come back to reality, the next explosion in venture dollars is just around the corner.