AI became a buzzword after the launch of ChatGPT by OpenAI in November 2022. Every startup aspires or claims to be an AI startup today. The funding data shows that since the launch of ChatGPT, more than 70,714 AI startups have been launched globally, with 240 in India in 2024 alone. AI in insurance is also gaining traction as companies explore various applications. The AI market is expected to reach $184 billion by the end of 2024 and $826.70 billion by 2030, growing 28.46% annually.
A consequence of the AI boom is its impact on various industries. As we look at insurance, it will be unfair to not look at some of its allied sectors. This article focuses on the funding and investments trends in AI in insurance and allied sectors in cyber and healthcare.
Global Funding Trends
The infographic above provides a broader perspective on the funding landscape in the insurance, healthcare, and cyber sectors on a global scale. Analyzing overall funding regardless of round, we see that funding was at its peak in 2021, and has been in a gradual decline since across all three sectors. Healthcare leads with highest overall funding amongst the three, followed by cyber & lastly insurance.
- Insurance: The total funding for the insurance sector stands at $7.4 billion, with $1.7 billion in funding over the last 2 years. The key geographic areas of interest include the United States, Israel, and the United Kingdom.
- Healthcare: The healthcare sector has attracted a total funding of $60.8 billion, with $13.9 billion in funding over the last 2 years. The key geographic areas of interest include the United States, China, and the United Kingdom.
- Cyber: The cyber sector has received a total funding of $39 billion, with $5.5 billion in funding over the last 2 years. The key geographic areas of interest include the United States, China, and Israel.
These global funding trends suggest that the insurance, healthcare, and cyber sectors continue to be areas of significant investor interest and activity, with the healthcare sector standing out as the most well-funded among the three.
Seed Funding Trends
- Insurance Sector: Seed funding for insurance AI startups reached its peak during 2021-2022 (77.5mn$) but has been on a downward trajectory since 2022. We have just $20mn million in 2024 (year-to-date) raised in seed rounds.
- Healthcare Sector: The AI in healthcare sector exhibits a more consistent and positive trend in seed funding. In the last 3 years the seed funding has maintained an upward trajectory of being in the range of $600mn+.
- Cyber Sector: Seed funding for cybersecurity startups has been on an upward trajectory, reaching over $1.1bn in 2024 (year-to-date). This indicates a sustained investor interest in early-stage cybersecurity ventures, likely driven by the continued growth and importance of the industry.
Early Stage Funding Trends
The graph on “Early Stage Funding Trends” provides an overview of the funding activity in the insurance, healthcare, and cyber sectors over the past 6 years. Let’s dive into the key insights:
- Insurance Sector: The insurance AI startups raised a total of $821mn in Series A & B rounds in 2021 – the highest in the sector, in the last 6 years. The funding has been in decline since, with $525mn in 2022, $302mn in 2023 & $256mn in 2024.
- Healthcare Sector: The healthcare sector exhibits a more volatile funding trend. After a dip in 2020, early-stage funding for healthcare startups rebounded strongly in 2021, reaching over $6bn. This was followed by a gradual decline, with 2024 (year-to-date) numbers hovering around $2.5bn. The healthcare sector seems to have experienced a funding boom, but the sustainability of this trend remains to be seen.
- Cyber Sector: The cyber sector has maintained a relatively stable and consistent level of early-stage funding, with figures ranging from $1.5bn to $2.5bn throughout the period. This suggests a more steady and sustained investor interest in cybersecurity startups, potentially driven by the ongoing digital transformation and increasing importance of cybersecurity measures.
Conclusion
As the AI landscape continues to evolve, the insurance, healthcare, and cyber sectors are poised to play a pivotal role in shaping the future of technology-driven solutions. The funding trends analyzed in this report underscore the industry’s resilience and the unwavering confidence of investors in the transformative power of AI startups.
A look at the above trends, suggest that AI in cyber has seen the most number of startups out of the ChatGPT boom, with funding at seed stage booming to record high levels. However, AI in insurance & AI in healthcare do not show any positive impact.
By understanding these funding patterns, entrepreneurs, investors, and industry stakeholders can gain valuable insights to inform their strategic decision-making, guide product development, and identify potential opportunities or challenges in the evolving AI-powered technology landscape.
References
Tracxn feed report: AI in insurance
Tracxn feed report: AI in healthcare
Tracxn feed report: AI in Cyber
