AI and Tech Investing Trends in Investment Crowdfunding

As of August 2024, online startup investors have over 550 active investment opportunities to consider. While several notable investment trends have emerged over the past 12 months (did someone say “AI”?), investors still have a diverse range of deals available to them.

In this week’s Chart of the Week, we break down the latest investment trends in AI and other popular tech sectors since July 2023.

• Only one AI deal in the top 10 funding rounds: surprisingly, nine of the top ten deals that attracted the most investments over the past 12 months did not have an AI focus.
  • Miso Robotics, which ranked 9th with $8.6 million invested, is the only AI-focused company to breach the top 10. Miso Robotics has an “AI-enabled” robot that functions as a kitchen assistant.
• AI deal growth: the number of deals mentioning “AI” as a key part of their business has grown from five raises in Q1 2020 to 35 raises in Q3 2024. As a percentage of all active raises, AI-focused deals have risen from 5.8% in 2020 to 9.6% in 2024.
• AI deals attract more investments: deals with an “AI” focus have received 39% higher investment commitments in early-stage rounds ($477k vs. $344k) and 25% higher commitments in growth-stage rounds ($1.9M vs. $1.5M).
• AI deals getting higher valuations:  furthermore, AI companies have commanded higher median valuations — $20 million for AI companies versus $7.5 million for non-AI companies.
• Other investment trends outside of AI: looking more broadly at tech sectors, the most popular sectors by total Reg CF & Reg A+ investments over the past year are:
  • CleanTech ($220.8 million, 131 deals)
  • FinTech ($70.2 million, 118 deals)
  • EnterpriseTech ($58.6 million, 136 deals)
  • HealthTech ($55.1 million, 152 deals)
  • HardwareTech ($54.6 million, 102 deals)
• Top funding rounds by sector: the most popular (by amount invested) currently active deal in each of those sectors is:
  • CleanTech – EnergyX, $48 million
  • FinTech – Shared Capital Cooperative, $3.6 million
  • EnterpriseTech – AtomBeam, $4.1 million
  • HealthTech – TriAgenics, $3.9 million
  • HardwareTech – Arrive (formerly DroneDek). $1.9 million

Let’s now take a closer look at the investment trends and data.

Is Artificial Intelligence (AI) a Hot Online Startup Investment Area in 2024?

Comparing the online startup investing (Reg CF and Reg A+) markets with public markets, we can see that the mention of “AI” as part of S&P 500 company earnings calls spiked in late 2022:

Source: FactSet

And according to Pitchbook data, VCs invested a record $29.1 billion into 691 generative AI deals in 2023.

Source: Pitchbook

Let’s now take a look at the trends that we’re seeing in regulated investment crowdfunding.

AI Investment Trends in Investment Crowdfunding

While perhaps not quite as drastic of an increase as public market mentions of AI or the spike in VC deal volume, investment crowdfunding companies highlighting “AI” or “machine learning” as key parts of their business have been trending up in the regulated investment crowdfunding markets as well:

And as a percentage of all annual deals, companies that put a focus on AI as a key differentiator have grown from 5.8% of all raises in 2020 to 9.6% of all raises so far in 2024:

Average Capital Invested into AI vs. Non-AI Online Startups

So the number of deals that have an AI component to the business have been increasing, but have investors been investing more in AI-focused companies?

In short, yes – the average “AI” deal has raised 39% more capital in early-stage deals and 25% more capital in growth-stage deals when compared to companies without an AI focus.

And when looking at median valuations of AI vs. non-AI companies, we see that AI companies over the past year have had a median valuation of $20 million, while the valuation of non-AI companies has only been $7.5 million.

While one explanation of this could be that the AI “hype” is inflating expectations and valuations, another explanation could be that the AI issuers using investment crowdfunding are more mature. However, when looking at the annual revenues for the AI vs. non-AI deals, we can see that the latter explanation doesn’t hold up.

As we can see, the cohort of AI deals over the past 12 months actually had a higher percentage of pre-revenue deals and a lower median annual revenue. Thus, it is more likely that AI deals are getting a premium in the current fundraising environment.

Tech Sector Investing Trends in Regulated Investment Crowdfunding

Let’s now zoom out and look more broadly at general tech sector investing trends. To gauge “popularity” of tech sector investing trends and raises, we will be looking at the amount of capital commitments.

First, the top five Tech Sectors by amount invested over the past year (July 2023 – August 2024) are:

These broader trends, popular by both the number of available investment offerings and by total investor commitments, align well with venture capital (VC) and public market investor trends.

For example, CleanTech and FinTech are also seeing significant interest in the VC world, particularly as global initiatives toward sustainability and digital financial services continue to grow. CleanTech, in particular, has seen a surge in both private and public markets due to increasing environmental regulations and the push for green energy solutions.

EnterpriseTech and HealthTech are similarly strong sectors in both the VC space and the public markets. EnterpriseTech (e.g. B2B SaaS) continues to attract significant investment as companies prioritize efficiency and security in their digital infrastructure, a trend seen across various public market tech indices. HealthTech’s prominence is driven by ongoing innovations in digital health and telemedicine — especially since COVID-19 — making it a favorite among both private and public investors.

HardwareTech investments in regulated crowdfunding are slightly less aligned with broader VC and public market trends, where software and service-driven sectors typically receive more attention. However, the rise of innovations in areas like IoT and last-mile delivery solutions has kept this sector relevant, reflecting investor interest in tangible, tech-driven hardware solutions that complement the growing digital landscape. This also shows that investment crowdfunding may be more supportive of sectors like this which may traditionally be less-favored by traditional VCs and insitutional investors.

Next, the most popular individual funding campaign within each of the top tech sectors is:

*Regulation A+ (Reg A+) raises may not always provide an intended close date. 

As the individual company data show, many of the top campaigns have been Reg A+ raises. These companies tend to be later-stage, have more traction, and may have more marketing dollars and larger teams, so it isn’t a surprise to see that the top issuers are often Reg A+. Furthermore, Reg A+ allows issuers to raise up to $75 million max, vs. the cap of $5 million on Reg CF every 12 months.

Kingscrowd Edge members can view more trends by Tech Sector on the Market Trends page.