PitchBook News - The great AI gap: consumer startups

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The Weekend Pitch

December 8, 2024

Presented by Deloitte

(Mara Potter/PitchBook News)

When I was at the startup conference Slush last month in Helsinki, artificial intelligence dominated not only the panels but also my conversations with founders and investors.

While I expected this, one thing struck me in the 10-plus conversations I had with VCs over the two-day period: Almost all of them were focused on enterprise.

The words "consumer" or "B2C" rarely featured, and when they did it was mainly to remark that comparatively few investments in that market appear to be taking place.

Previous tech eras such as the rise of the internet or mobile targeted the consumer first and business later. Big consumer companies like Amazon and Uber led the initial wave of both of these technologies. And yet, in the age of AI, the reverse seems to be true.

I'm Leah Hodgson, and this is The Weekend Pitch. You can reach me at leah.hodgson@pitchbook.com or on X @LeahFHodgson.

Venture funding for B2B AI startups stands at $16.4 billion this year, according to PitchBook data. But the amount going to their B2C counterparts is less than half that, at only $7.8 billion. For generative AI startups specifically, deal value for B2C is only 6.4% of B2B’s current total for 2024.

Yet by one estimate, the consumer AI market by 2032 will be twice the size of the enterprise market for AI.

With the balance tipped so far in favor of enterprise, the question is: Is there a lack of consumer AI companies, or is VC just not funding them?

Trivia

The insurtech vertical has been stalled but amid a lowering interest rate environment, deal activity ticked up in Q3. Across 101 deals, how much capital was deployed within insurtech during Q3?

A) $789 million
B) $2.1 billion
C) $1.6 billion
D) $1.6 billion

Find your answer at the bottom of The Weekend Pitch!

Private funds pine
for a post-election pop

(Steve Christensen/Getty Images)

Now that the US presidential election is in the rearview mirror, optimism is growing for a boom in dealmaking and exits—potentially driving distributions for LPs and making future fundraising easier, according to our latest Global Private Market Fundraising Report.

Not that fundraising has been bad: While the latest numbers can be deceptive given a lag in reporting, PitchBook senior strategist Hilary Wiek believes the last 12 months have been a strong period for private market fundraising. Infrastructure vehicles experienced a surge in Q3, and secondaries are benefiting from a cyclical bump as large asset managers close their latest vintages.

read the report

Share:

An incoming tailwind
for insurtech

(Blackdovfx/Getty Images)

A decrease in interest rates has altered the atmosphere in the insurtech sector, resulting in both additional innovation opportunities and new challenges for startups in the space.

The insurtech industry saw $1.6 billion invested across 101 VC deals in Q3 2024, according to our latest Emerging Tech Research—representing a slight uptick in deal value, though combined PE and VC investment remained on par with previous quarters.

The interest rate adjustment may lower capital costs and allow companies to invest in new technology, but it could also strain profitability, specifically in the life insurance market.

get the report

Share:

Quote/Unquote

(imaginima/Getty Images)

"The US legal market, arguably the largest in the world, is ripe for disruption"

—Schuster Tanger, co-managing partner at TQ Ventures discussing the legal tech industry amid an AI-driven flurry of deals.

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

Q3 2024 Foodtech Report
Q3 2024 Germany Snapshot
Q3 2024 Information Security Report
Q3 2024 Enterprise SaaS Report
Q3 2024 Mobility Tech Report
Q3 2024 US PE Middle Market Report

Trivia

Answer: D

In Q3 $1.5 billion was deployed across 101 deals in insurtech. You can read more about the past quarter for the vertical here.

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This edition of The Weekend Pitch was written by Leah Hodgson and Jacob Robbins. It was edited by Heather West and Ron Prichard.

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PitchBook News - The great AI gap: consumer startups

Trivia

Private funds pine
for a post-election pop

An incoming tailwind
for insurtech

Quote/Unquote

Stay tuned

Trivia

Sign up for our newsletter

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PitchBook News - The great AI gap: consumer startups

Trivia

Private funds pine for a post-election pop

An incoming tailwind for insurtech

Quote/Unquote

Stay tuned

Trivia

Sign up for our newsletter

Older messages

You Might Also Like

Private funds pine
for a post-election pop

An incoming tailwind
for insurtech