AI fundraising is surging after temporary period of decline in deal volumes

The latest Artificial Intelligence market report from Hampleton Partners, the international M&A and corporate finance advisory firm for software and technology companies, reveals that fundraising for AI companies is now on the rise after a period of diminished deal volumes.

The report shows that, following an initial boom in fundraising which accompanied the first wave of excitement around AI in 2021 and 2022, the flow of investor capital into the sector slowed, only to pick up again in 1H2024. This trajectory can be seen both on an overall global level and in specific regions.

For example, following a lull in late 2022 and 2023, fundraising volume is surging in Europe, driven by blockbuster investments in firms like DeepL and Mistral. A similar curve can be seen in Asia, where a resurgence in fundraising following two years of decline reflects renewed investor confidence buoyed by strategic national initiatives and an increasing reliance on AI in sectors such as health, finance and consumer services.

In terms of M&A activity, the period from 2020 and 2021 saw record highs in transaction counts, with companies leveraging acquisitions to enhance their technological capabilities and in-house talent. While deal numbers have since declined, the total M&A deal volume has risen in 2024 thanks to an increase in the value of individual transactions.  

“Unlike typical M&A markets, where consolidation and strategic acquisitions are dominant, the AI sector has seen an increase in funding rounds,” said Heiko Garrelfs, Hampleton Partners’ Sector Principal for AI. “This trend reflects the ongoing belief in the potential of AI, leading investors to allocate capital to promising companies to accelerate growth and innovation.”

In terms of deal count, the top three most active buyers within the global AI sector since 2020 have been:

Accenture – 19 acquisitions, including ALBERT (data analytics, natural language processing), Novetta (data analytics, fraud detection, national security), and Maihiro (CRM, predictive analytics)

IBM – 6 acquisitions, including Turbonomic (cloud optimisation, application resource management), WDG Solucoes (industrial automation), and Apprente (AI voice recognition, automatic ordering)

ServiceNow – 6 acquisitions, including Element AI (systems software, machine learning), Loom Systems (AIOps), and Hitch Works (skills intelligence, talent mobility)

Download the full Hampleton Partners Artificial Intelligence Report 2H2024, which discusses megatrends and major deals which are determining the course of the sector.

Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database (www.451research.com); Capital IQ, CB Insights, Gartner, IDC and more.

Hampleton Partners advises technology company owners on M&A and growth financing transactions with strategic buyers or financial investors. Hampleton’s experienced deal makers have advised hundreds of tech industry shareholders and provide hands-on expertise and unrivalled advice to entrepreneurs looking to sell their companies, partially exit, or to accelerate growth.

With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Enterprise Software, Digital Commerce, IT & Business Services, Artificial Intelligence, Autotech, Cybersecurity, Fintech, Healthtech, HR Tech, and Insurtech. 

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