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Market Map: Mega-deals dominate AI’s horizontal platform startups

Mega-deals are fueling the horizontal platforms segment of AI and machine learning.

Mega-deals continue to cast a wide shadow over the AI venture landscape.

Much of the money is going to companies working on horizontal platforms—those building, deploying or fine-tuning AI models. In May, xAI, the Elon Musk-led large language model creator, raised a $6 billion Series B. Mistral AI, a French LLM provider, raised $640 million this month. And Cohere, another AI model developer, is reportedly in talks to raise $450 million.

The market map below explores the horizontal platforms segment of the AI and machine learning vertical. Click on the blue title to see the entire segment.

 

To go deeper, read our Q1 2024 Artificial Intelligence & Machine Learning Report. PitchBook subscribers can also explore the full market map with details on more than 24,000 companies.

Spotlight: Horizontal platforms

PitchBook analysts have broken out horizontal platforms into five categories:

  • AI core: These startups are creating the building blocks of AI, like developer and orchestration tools used to fine-tune models, deployment operations that allow for models to plug into existing systems, and data collection and analysis platforms that process what goes into a model.
  • Foundation models: These companies create, train and sell access to models, like OpenAI‘s ChatGPT, Anthropic‘s Claude and Stability AI‘s text-to-image generation model, Stable Diffusion.
  • Computer vision: These companies use AI and machine learning to process and analyze visual data in order to provide insights and control systems like autonomous driving, facial recognition and security monitoring.
  • Natural language technology: These tools, programs and services learn from communications data to create AI that can be responsive, such as conversational AI used in chatbots, language translation and language generation.
  • AI automation platforms: Mostly focused in the enterprise space, these startups offer software and services that utilize AI to analyze data, produce insights and make decisions for users.

The AI and machine learning space is easing into a new normal, with quarterly deal flow mostly flat in recent years. Overall, 2023 marked a slight decline from the previous year, with $90 billion invested across 7,909 deals compared to 2022’s $102.2 billion raised across 9,355 transactions.

In Q1, horizontal platform companies raised $10.3 billion, nearly half of the total raised in the AI and machine learning vertical.

Notable deals include those for AI customer service automation startup Cognigy, which raised a $100 million Series C this month led by Eurazeo Growth. AI language translation company DeepL raised $300 million led by Index Ventures and joined by investors including by Iconiq Growth and IVP in May. Scale AI, which offers a training platform for generative AI applications, raised a $1 billion Series F also in May led by Accel with participation from Nvidia, Founders Fund, Tiger Global and others.

Exit value has continued to tumble from its 2021 peak of $259.5 billion. In Q1 2024, $7.3 billion was generated across 114 deals.

The broader space has been buoyed by the successful March IPO of Astera Labs, a chipmaker for AI cloud data centers. Big tech companies have also made acquisitions: Nvidia purchased AI workload management startup Run:ai in April and Apple acquired DarwinAI, a computer vision startup, in March. Deal terms were not disclosed in either acquisition.

Featured image by Joey Schaffer/PitchBook News

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    About Jacob Robbins
    Reporter Jacob Robbins covers artificial intelligence and the venture capital ecosystem for PitchBook. Based in Seattle, Jacob is originally from Massachusetts and holds dual degrees in political science and cinema studies from the American University. His work has previously appeared in Air Mail and Business Insider.
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    About Jordan Rubio
    Jordan Rubio is a Seattle-based data visualizations editor at PitchBook. He previously worked at the Houston Chronicle as a data journalist and at the Victoria Advocate as a digital editor. A native of Jacksonville, Fla., Rubio graduated from TCU.
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