North America’s Startup Funding Falls In Q3 As AI Giants Eye The Public Markets

Funding to North American startups declined sequentially in the third quarter and came in well below the all-time peak. However, the dip is largely due to the absence of new megarounds for OpenAI and Anthropic and doesn’t appear to reflect any broad weakening in the venture investment climate.

In total, investors poured $92 billion into seed- through growth-stage rounds for U.S. and Canadian startups in the third quarter, per Crunchbase data. That’s a 35% decline from the prior quarter but up 50% from year-ago levels. Deal volume held fairly steady, with late-stage and early-stage round counts remaining close to prior quarter levels. Artificial intelligence remained the prevailing theme for startup investors. Per Crunchbase data, roughly two-thirds of total funding this past quarter went to AI-focused companies. Of that, a big chunk went to large rounds for Databricks, Safe SuperIntelligence and Crusoe. Overall, however, investment fell across most stages. Early-stage dealmaking posted a particularly sharp decline from a multiyear peak the prior quarter, while later-stage funding was also down. As for exits, quarter-over-quarter IPO comps were always going to be challenging, given that Q2 featured SpaceX’s record-setting market entry. Even compared to a typical quarter, however, the IPO market was fairly sluggish in Q3, with a few biotech, energy and consumer-facing offerings, but no blockbuster tech debuts. M&A activity was more exciting, topped by Nvidia’s September acquisition of Hugging Face. Below, we look over the quarterly numbers in more detail, breaking out investment by stage, charting AI funding, and analyzing exit activity. Table of contents Late-stage and technology growth funding Early stage Seed AI Exits M&A IPOs Slower, but not a slowdown Methodology Glossary of funding terms Late-stage and technology growth funding We’ll start with late stage, since that’s where most startup funding went. For Q3, investors poured $66.45 billion into late- and growth-stage deals, per Crunchbase data.