Tech Startup Investment Trends 2025: Is It Time for a New Venture?

Tech startup investment is on the decline. CB Insights’ State of Venture 2023 Report found that venture funding dropped to $248.4 billion in 2023, down from $426.2 billion in 2022, marking the lowest rate since 2017.

A hostile economic climate, high interest rates, and high-profile catastrophes like the collapse of Silicon Valley Bank have created an environment where investors are more selective, making startup business funding harder to come by.

The current state of affairs has led many companies to look toward crowdfunding investment as an alternative. However, plenty of VC funding opportunities are still available to high-performance providers.

In this article, Techopedia examines some of the top tech startup investment trends in 2024.

This includes a look at tech startup funding and fundraising trends, a breakdown of key solution areas like AI and cybersecurity, and a look at the tech startups that raised the most funding.

Table of Contents Table of Contents

1. Key Takeaways
2. What Are the Top Tech Startup Investment Trends of 2024?
3. Top Tech Startups That Have Secured the Most Funds in 2024
4. The Appetite for AI
5. Cybersecurity Keeps Ticking on
6. The Bottom Line
7. FAQs
8. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. What Are the Top Tech Startup Investment Trends of 2024?
3. Top Tech Startups That Have Secured the Most Funds in 2024
Show Full Guide
4. The Appetite for AI
5. Cybersecurity Keeps Ticking on
6. The Bottom Line
7. FAQs
8. References

What Are the Top Tech Startup Investment Trends of 2024?

As Q1 of 2024 comes to a close, it appears that VC investment will remain on the decline. Investment intelligence firm PitchBook found that global VC investments totaled $75.9 billion between January and March, the lowest since the second quarter of 2019, while the number of estimated deals fell to 10,222, a four-year low.

Aurojyoti Bose, lead analyst at GlobalData, told Techopdia via email:

“There was a slowdown in VC funding activity in 2023 compared to the previous year with both deal volume and value registering decline. 2024 also started on a slower note suggesting that the funding winter is far from getting over and resultantly, we saw start-ups struggling to raise funds in the initial months of the year as investors seem to have become extra cautious.”

Bose notes that there were “some signs of improvement,” with key markets like the U.S, China, and India witnessing more VC funding activity during February 2024 than they did in January 2024.

Some of the standout fundings in the U.S. during the quarter include robotics startup Figure ($675 million), AI compute provider Lambda ($320 million), financial wellness company Rain Technologies ($300 million), endpoint security vendor NinjaOne ($231.5 million), and Bugcrowd ($102 million).

CB Insights also noted in its State of Venture Q1’24 report that while VC dealmaking decreased to a 7-year low in Q1 2024, there were some signs of improvement.

Most notably, Q1 VC venture funding increased 11% quarter-over-quarter to $58.4 billion, and VC deals worth over $100 million rose 30% quarter-over-quarter to 105.

While AI and generative AI have remained a central focus of investment among tech startup investors, they aren’t necessarily the biggest sectors.

In fact, according to Crunchbase, healthcare and biotech was the most funded sector in Q1, raising $15.7 billion in funding compared to AI’s $11.4 billion in funding.

Top Tech Startups That Have Secured the Most Funds in 2024

So, what companies and startups are getting investments in 2024?

If we look at the startups that have attracted the highest investments, we can see that AI and AI-adjacent technologies – such as robotics, which is mutually beneficial when used in combination with AI – are the clear leaders.

According to the CB Insights State of Venture Q1’24 Report, the top equity deals obtained in Q1 2024 were as follows:

• Anthropic: LLM-developer Anthropic Raised $2.8 billion from Amazon off the back of the success of its Claude LLM (now Claude 3), a virtual assistant and chatbots that’s been designed to produce less harmful outputs.
• Epic Games: Well-known games developer and pioneer of Fortnite Epic Games raised $1.5 billion in funding from The Walt Disney Company to help support future growth and create an open, persistent universe.
• Generate Capital: Sustainable investment company Generate company raised $1.5 billion in investment from AustralianSuper, Queensland Investment Corporation, HESTA, and California State Teachers Retirement System.
• Moonshot AI: Chinese generative AI startup Moonshot AI raised $1 billion from investors, including Alibaba Cloud, HongShan, China Merchants, China Direct Investments, Meituan, and Xiaghongshu for its focus on creating long context LLMs.
• Echelon Data Centres: Data center provider Echelon Data Centers raised $850 million from Starwood Capital Group to support the growth of its service portfolio, which already includes six facilities across Ireland and the UK.
• Anthropic: Once again, Anthropic features on the list due to a $750 million investment from Menlo Ventures.
• Radiology Partners: The largest radiology practice in the U.S., Radiology Partners, which has been using AI to deploy services to assist patient care, raised $720 million in funding from undisclosed investors.
• Wonder: New York-based mobile food delivery startup Wonder raised $700 million in funding from Accel, Bain Capital Ventures, New Enterprise Associates, Forerunner Ventures, and Google Ventures.
• Huakong Electric Power: China-based energy saving and intelligent control service provider Huakong Electric Power raised $693 million from investors, including Qingwang Capital and Tamarace Capital.
• Figure: AI humanoid robotics startup Figure raised $675 million from M12, OpenAI Startup Fund, Intel Capital, and Parkway VC.

Five of these top 10 startups have a strong link to AI – Anthropic, Moonshot AI, Radiology Partners, and Figure. Undoubtedly, generative AI is a core focus in each provider’s product portfolio.

Two main reasons for this are that language models enable workers to automate basic processes while increasing their access to queryable data.

The Appetite for AI

AI is one of the most active areas of startup funding, but it still hasn’t managed to avoid the overall decline in VC funding. CB Insights State of AI 2023 Report found that AI startups raised $42.5 billion in 2023, a significant drop from $47.3 billion in 2022.

Some of the top equity deals made last year include LLM-provider Aleph Alpha ($500M), Claude 3 producer Anthropic ($500M), open model developer Mistral AI ($415M), and LLM-focused Chinese-AI startup Baichuan AI.

Based on these deals, we can say that generative AI has dominated investment activity in AI. This is mainly due to the hype ChatGPT created after its launch in November 2022, as organizations looked toward LLMs as a potential force multiplier for employee productivity.

Cybersecurity Keeps Ticking on

Looking at the results for Q1 2024 and for 2023, we can see that cybersecurity investment continues to tick on, even though it’s slowed down.

Pinpoint Search Group’s Cyber Security Vendor Funding Report for Q1 2024 finds that cybersecurity companies raised $2.3 billion in the first quarter of 2024 across 77 funding rounds. This marked a 20% decrease from the Q1 2023 total.

If we roll the clock back to 2023, Crunchbase’s research finds that cybersecurity vendors raised $8.2 billion across 692 venture capital funding deals in 2023, compared to $16.3 billion in 941 deals in 2022. 2023 also marked the lowest cybersecurity funding since 2018.

However, substantial investments in cybersecurity companies like NinjaOne and Bugcrowd in Q1 2024 highlight that there is still considerable investor interest in technologies enabling enterprises to navigate the threat landscape.

This is unsurprising, given the high cost of data breaches and the prevalence of intrusions. Geopolitical conflicts, from the Russia-Ukraine war to the Israel-Hamas conflict, have also increased anxiety over cyber warfare and an uptick in hacking activity.

Ultimately, so long as organizations are dependent on IT to enable key operations, cybersecurity will always remain a central investment point.

The Bottom Line

Tech startup investment isn’t as active as it once was. However, there’s still plenty of VC funding for well-organized startups in key solution areas like AI, cybersecurity, and healthcare, as well as plenty of opportunities to invest in startups.

Startups that leverage technology to address foundational business problems, from LLMs that can accurately summarize and query mission-critical data to cybersecurity platforms that streamline vulnerability mitigation, will maximize the chance of gaining startup capital.

FAQs