The global pandemic put a sharp brake on venture capital deals for AI startups in Q1 2020, as investors fled early-stage deals and doubled down on the very largest private companies. According to a new report by CB Insights, AI startups globally raised $8.4 billion in the first three months of 2020, up from $5.58 billion in the previous quarter and roughly flat compared to Q2 and Q3 2019.

However, the steady funding picture is heavily skewed by the $2.3 billion round Waymo raised in the quarter. Indeed, 14 AI startups raised mega-rounds of more than $100 million. Among their ranks are the $462 million raised by Pony.ai, $263 million raised by Berkshire Grey, $150 million raised by Snyk, and $216 million raised by StackPath.

The shift away from early-stage deals could have longer-term implications if promising AI technologies can’t attract enough capital to continue developing their services. Of course, this could make such companies cheap acquisition targets, or it could mean that their ideas wither on the vine and disappear without ever being fully developed. Whether either scenario slows the overall impact of AI development remains to be seen.

According to CB Insights, the number of overall AI funding deals fell to 506 for the quarter, down from around 542 in the previous quarter and about 660 in Q3 2019.

Investors sought shelter with more established companies as the percentage of deals targeting seed and series A rounds fell to 64% for the quarter. That’s below the 73% rate from the previous quarter. In recent years, such early-stage AI startups have at times accounted for as much as 80% of all funding deals, according to CB Insights.

U.S.-based startups fared a bit better. The U.S. share of AI funding deals rose to 41% in the quarter, compared to 37% in the previous quarter. Earlier this month, the National Venture Capital Association reported that 285 AI-related companies in the U.S. raised $6.9 billion in the first quarter of 2020, a pace that would have set a new annual record before the coronavirus lockdowns.

Until now, AI funding had been red hot, setting records in the U.S. and globally in 2019 and outperforming overall venture capital trends, which were flat or slightly down.

Not surprisingly, exits in the AI sector also took a hit in Q1, amid volatile market conditions. The number of exits hit an 11-quarter low, according to CB Insights, with only 29 acquisitions compared to 59 deals the previous quarter. And there were no IPOS, versus six in Q4 2019.

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