Machine Learning Applications Leads Artificial Intelligence In Number of Investors

The artificial intelligence (AI) industry has seen 3,434 investors and $62B total all time funding. Let’s analyze which AI categories have the most number of investors actively financing the startups. The graphic below highlights AI categories based on the number of investors in each category.

Artificial Intelligence Investors Per Category
Artificial Intelligence Investors Per Category

As the graphic demonstrates, Machine Learning Applications has the highest number of investors at 1988, with Machine Learning Platforms following behind at 785. Machine Learning Application companies apply self-learning algorithms to optimize specific business operations, while Machine Learning Platform companies build these algorithms that operate based on their learnings from existing data. In addition, the average number of investors across all AI categories is 507.

To learn more about our complete artificial intelligence dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Artificial Intelligence Sector Overview – Q1 2019

This blog post examines the different components of the artificial intelligence (AI) ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.

Machine Learning Applications Is The Largest Artificial Intelligence Category

Let’s start off by looking at the Sector Map. We have classified 2497 AI startups into 13 categories. They have raised $60B from 3420 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.

Artificial Intelligence Logo Map
Artificial Intelligence Logo Map

We see that Machine Learning Applications is the largest category with 943 companies. These companies utilize self-learning algorithms to optimize vertically-specific business operations. Examples include using machine learning to detect banking fraud or to identify relevant sales leads. Some example companies are Sift Science, SparkCognition, Sumo Logic, and BenevolentAI.

Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.

The Pioneers and Disruptors Quadrants Have the Most Artificial Intelligence Categories

Our Innovation Quadrant divides the AI categories into four different quadrants.

Artificial Intelligence Innovation Quadrant
Artificial Intelligence Innovation Quadrant

We see that both the Pioneers and Disruptors quadrants have the most number of AI categories at 6, each accounting for 46% of all AI categories. The Speech-to-Speech Translation category has the highest average age, and the Recommendation Engines category has the highest average funding. On the other hand, the Context Aware Computing and Virtual Assistants categories are low on both average funding and age.

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Explained – AI’s Explosive Funding Growth

Artificial Intelligence (AI) has become one of the hottest sectors in recent years, with its technology promising to revolutionize and automate every industry imaginable. We have been covering this trend, showing a massive increase in AI startup funding. As you can see in the graphic below, AI funding more than doubled from 2016 to 2017. Its funding more than tripled from 2016 to 2018.

AI Funding Over Time
AI Funding Over Time

This phenomenon then begs the question – what caused this explosive growth in AI funding? This explainer blog will help you understand the contributing forces behind the growth. It can be attributed to three factors:

  • The geopolitical battle between the US and China
  • The AI sector maturing over time
  • Specific AI functions gaining strong traction

US and China’s Geopolitical Battle for AI Dominance

The first factor contributing to the staggering AI funding jump is the geopolitical battle for AI dominance between the US and China. A plethora of news outlets, such as the Wall Street Journal and Forbes, are reporting on the technology battles between the US and China, especially around AI. Experts in those articles have echoed the sentiment that AI is expected to power the development of future business and national security strategies. Many also voiced the opinion that China may supplant the US as a technology leader as it makes significant headway in AI.

The data from our AI dynamic report reinforces the opinions expressed in the above publications. As you can see in the chart below, the lion’s share of AI startup funding is happening in the US and China, with China overtaking the US in 2018. The US jumped from $3B in 2016 to almost $8B in 2018, while China demonstrated even stronger growth, increasing 8-fold from $1B in 2016 to over $8B in 2018.

It’s also noteworthy that China’s AI funding in 2018 comprised 44% of the entire world’s AI funding, whereas the US’s AI funding comprised 41%. Clearly these two geographies are driving the AI revolution, with China now in the lead.

AI US-China Funding Comparison
AI US-China Funding Comparison

We should note a risk factor around the above conclusion. Some news outlets are reporting that 50% to 80% of Chinese companies exaggerate their funding by a factor of 2 to 10 to attract further investments and intimidate competition. While the accuracy of such claims was not further verified, they would certainly encourage us to treat the above conclusion regarding the US-China AI battle with some level of caution and scrutiny.

AI Sector Maturing As Funding Moves to Later Stages

The second contributing factor is the gradual maturation of the AI sector as funding events move to later stages. As demonstrated in the graph below, AI seed financings decreased from almost 70% of funding events in 2013 to below 30% in 2018. In contrast, Series B to Late Stage financings in AI have steadily increased from 15% of total funding events to 35%.

AI Funding Round Count Percentages
AI Funding Round Count Percentages

This continuous rise in mid to late-stage funding events indicates that the sector is maturing over time. More mature companies require larger funding amounts, which is consistent with the growth in overall funding that we are witnessing. Thus, the explosive funding increase from 2016 to 2018 can be partially explained by the AI sector’s gradual emergence as an established cornerstone in the modern technology landscape.

Specific AI Functions Seeing Massive Funding Increases

Venture Scanner organizes chaotic startup landscapes into understandable groupings. For AI, we have broken the sector down into 13 categories. These categories are defined by a specific technology function, such as Machine Learning or Natural Language Processing. Analyzing the AI categories has revealed the third contributing factor, that a small set of AI functional categories are behind the explosive growth seen in the above charts.

As demonstrated in the graph below, Machine Learning (ML) related categories have seen massive increases in funding, from around $4B in 2016 to around $15B in 2018. Computer Vision (CV) related categories also grew rapidly, from around $1B in 2016 to around $8B in 2018. Other AI categories, such as Smart Robots, NLP, and Recommendation Engines, also experienced large funding growth in 2017 and 2018.

AI Funding Over Time By Category
AI Funding Over Time By Category

Machine Learning Platform companies build algorithms that operate based on their learnings from existing data, while Machine Learning Application companies apply these self-learning algorithms to optimize specific business operations. By the same token, Computer Vision Platform companies build technology that analyzes images to derive information and recognize objects, while Computer Vision Application companies utilize this image processing technology in vertically specific use cases.

The fact that Machine Learning (ML) related categories and Computer Vision (CV) related categories are fueling the AI funding growth is consistent with our analysis that the AI sector is maturing as a whole. As specific AI technologies like ML and CV advance, more venture funding is needed to accelerate their development and adoption.

Conclusion: Geopolitical Battles, Sector Maturation, and Technology Advancement Contributed to AI Funding Increase

In summary, our analysis concludes that the top three contributing factors for the funding growth in AI are the geopolitical battle between the US and China, the sector maturing with its funding moving to later stages, and certain AI technology categories gaining significant traction.

To learn more about our complete artificial intelligence dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Artificial Intelligence Average Funding Event Size Shows Steady Growth

For this quarter’s funding analysis, let’s examine how average funding event sizes in the artificial intelligence (AI) sector are evolving. The graphic below shows the AI average funding event size over time by quarter.

Artificial Intelligence Average Funding Event Size
Artificial Intelligence Average Funding Event Size

As the graphic demonstrates, AI average funding event size in Q1 2019 was at $35M. This is an increase of 75% from the $20M in Q1 2018. The average funding size has been on a robust upward trend, with the average funding size last quarter around 3 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $940M round from Nuro, a $600M round from Horizon Robotics, and a $530M round from Aurora.

To learn more about our complete artificial intelligence dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Artificial Intelligence Report Highlights  – Q1 2019

Here is our Q1 2019 summary report on the artificial intelligence startup sector. The following report includes a sector overview and recent activity.

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AI Investors With the Most Activity

The artificial intelligence (AI) industry has seen $50B in total all time funding. Let’s analyze the investors making bets into AI and identify the most active firms.

The graphic below shows AI investors based on their number of investments into the sector. If an investor participates in two investment rounds in the same company (such as a Series A and Series B), that would qualify as two investments for this graphic.

Artificial Intelligence Investors with Most Investments
Artificial Intelligence Investors with Most Investments

As the graphic demonstrates, Y Combinator has made the most bets in the AI sector with 75 investments. New Enterprise Associates follows in second place with 64 investments. Examples of companies Y Combinator invested in include Vicarious, Sift Science, Atomwise, and Standard Cognition. Let’s see which investors make their way onto this list in 2019!

To learn more about our complete artificial intelligence dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

AI Exit Activity Slowed in 2018

Now that 2018 is complete, let’s see how exit activity for artificial intelligence (AI) compares to previous years. The graphic below shows the total annual AI exit events over time.

Artificial Intelligence Exits Over Time
Artificial Intelligence Exits Over Time

As the graphic demonstrates, 2018 saw a drop in AI exit activity compared to the previous year. The 58 exit events in 2018 represent a 22% decrease from the 74 exit events in 2017, which was the highest year on record for exit activity. However, AI exits are still on a general upward trend, with a 5-year CAGR of 24% from 2013 to 2018. Let’s see if the AI exit activity in 2019 will jump back up to the 2017 level.

To learn more about our complete artificial intelligence dynamic report, visit us at www.venturescanner.com or contact us at info@venturescanner.com.