Industrial sector beats out AI for top venture capital target

Industrials received the most venture capital funding of any sector since the start of the year, according to the latest data. Globally, industrial companies have raised $15.2bn (£12bn), 30 per cent more than AI startups and twice as much as healthcare companies.

Data from Altindex revealed that since the beginning of the year, AI companies have raised $11.6bn (£9.2bn) from venture capital, and healthcare has raised $7bn (£5.5bn).

However, this may be due to an oversaturation of funding for AI companies, as they have been the best fundraisers of any category for at least the last four years, raising a record $80.2bn (£63.5bn) in 2021, compared to industrial’s $11.4bn (£9bn).

In total, the industrials market has raised $122.1bn (£96.7bn) in venture capital funding in recent years, with almost half of that raised last year alone due to a record total $56.5bn (£44.7bn) raised.

Despite the industrial sector’s strong fundraising success in 2024, the number of fundraising rounds has actually dropped from 26 in the first quarter of 2023 to just 14 so far this year.

As the move towards decarbonisation has grown, governments have realised the importance of investing in infrastructure for electrification, transport, and renewable energy.

Additionally, since more traditional ways of investing in infrastructure have fallen out of favour, such as investment trusts, venture capital firms may also be reaping the benefit of that gap in the market, enabling them to get better prices for assets than they would with the competition.