Global venture capital investment in AI hit an all-time high of $110 billion (£88.8bn) last year, up from $68 billion (£54.9bn) in 2023, a sharp 62% year-on-year increase, according to the latest report from Dealroom.

It is the first time that VC investment in the technology has broken the $100bn ceiling since 2021, and almost double that of 2020, when global investment in AI tech peaked at $52 billion (£41.9bn).

The analytics firm’s new report, Opening Moves in Global AI, found that AI now makes up a third (33%) of all global venture capital spending, more than double the share of just two years ago, evidence of the stratospheric rise in interest surrounding the technology.

According to the numbers, the emergence of genAI has been the biggest driver of this growth, accounting for $47.4 billion (£38.2bn) of VC investment. Dealroom claims that firms working in genAI have witnessed unprecedented growth in average round sizes, outpacing conventional AI, not to mention the rest of the technology sector.

For example, genAI firms benefited from an average of $8.9 million (£7.1m) in seed funding last year, compared to just under $5 million (£4m) for other AI firms.

That disparity becomes more evident further along in the investment trajectory, resulting in genAI companies winning $199 million (£160.6m) at Series B, leaving other AI ventures lagging far behind at somewhere around $70 million (£56.5m).

However, this windfall for AI firms has come at some cost to the rest of the tech sector. Dealroom’s study found that VC investment in technology outside of AI fell by 12%, to $227 billion (£183.1bn) in 2024 compared to $258 billion (£208.2bn) a year earlier.

Dealroom’s study shows that seven of the top nine funding rounds in 2024 went to AI companies, with the largest being Databricks $10 billion (£8bn) funding round, and the $6.6 billion (£5.3bn) raised by OpenAI, a trend that looks set to continue into 2025.

Perhaps unsurprisingly, the US has so far dominated in terms of VC investment, raising ten times more than any other country in AI, and American AI startups winning $80.8 billion (£65.2bn) in funding compared to China’s $7.6 billion (£6.1bn), and the UK’s $4.3 billion (£3.4bn).

That trend is even more stark within genAI funding, where US startups have raised sixteen times more, at $83.9 billion, a staggering figure when set beside its closest rivals in the space, such as China with $5.1 billion, the UK’s $3.1 billion and France’s $2.8 billion.    

What is surprising, however, is that according to Dealroom’s data, despite the public perception of the US as an AI superpower, it might be falling behind in its AI expertise. 

The report found that Europe has the highest per-capita concentration of AI experts among software engineers, 30% higher than the US and almost three times that of China.

Within Europe, London was found to be the leading hub for AI talent concentration, having almost four times more AI engineers than any other European city, while Dublin was highlighted as having the highest density of AI engineers across the continent. 

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“US investment in foundational models is hefty but Europe continues to have a talent advantage which presents a window of opportunity on which we must act,” said Ziv Reichert, a partner at LocalGlobe, a London-based VC firm.

“Founders across Europe are galvanised to build the biggest companies leading the next wave of innovation to transform industries and bring meaningful productivity gains which will have widespread benefits across society, particularly in areas like education, healthcare and the energy transition.”

That next wave may already be on its way, following the European Commission’s launch of a €200 billion (£166.6bn) investment initiative, which will see public and private sector organisations partner for the creation of large-scale AI infrastructure to boost the technology across the European tech scene.