Sector Snapshot Key Trends in Dealmaking Artificial Intelligence

Sector Snapshot: Key Trends in Dealmaking 6 | Artificial Intelligence Importantly, some pundits have noted that AI-driven impacts on cloud services can recoup such spending swiftly. For example, if Azure for Microsoft grows 3% fromAI in Q1 2024 as it did in Q2 2023, then that could represent a meaningful portion of its investment in OpenAI already. As a result, VCs are splitting the difference and pushing early-stage financing medians to new highs, while late-stage and venture-growthmetrics are declining or holding flat as prospects for commercial viability are increasingly challenged by incumbents’ deployment of AI inmultiple products. However, due to the overall prospects for commercial value in many sectors with bespoke AI solutions founded on proprietary data, valuations keep climbing. Venture financing is tilting toward the late and growth stages Share of AI &ML VC deal count by stage *As of 02/20/2024. Source: PitchBook. Pre-seed/Seed Early VC Later VC Venture Growth 2013 2018 2015 2020 2023 2014 2019 2016 2021 2024* 2017 2022 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%