SINGAPORE, July 20, 2022 /PRNewswire/ — Global venture capital (VC) investment in artificial intelligence (AI) was near its peak, reaching US$22.3 billion in 2021. According to ABI Searcha global technology watch company, that’s just $0.4 million shy of the historic peak of US$22.7 billion recorded in 2019. Compared to the 15 billion US dollars recorded in 2020, the market has seen a remarkable recovery, growing 48.5% year-on-year.
“COVID-19 has dramatically accelerated the speed of digital transformation in business. Companies are looking for solutions for work process automation, customer service, due diligence, transcription and translation, and tools for activation of sales and marketing. At the same time, COVID-19 led to the great quit of 2021, where more than 47 million Americans voluntarily left their jobs. The massive wave of job changes led the companies to redesign their internal business processes, redeploy employees for high value-added tasks and retain valuable institutional knowledge,” said Lian Jye Suresearch director at ABI Research.
“It’s no surprise that startups led the funding in 2021,” says Su. These include UiPath and WorkFusion in enterprise automation, 4Paradigm, Databricks, Dataiku, DataRobot and H2O.ai in data science and AI development platforms, and AI chipset vendors such as SambaNova Systems, Groq, ECARX, Horizon Robotics, Enflame and Hailo. “Essentially, companies need to identify their AI strategies, whether it’s buy, build, or both. Companies looking to purchase their AI solutions will look to UiPath and WorkFusion; those looking to create their own custom AI will turn to data science and AI development platforms. In some cases, having the right AI solution is not enough. Companies are also looking for the most optimal AI hardware, and that’s where AI chipset startups come in,” says Su.
While the strong rebound indicated bullish market sentiment on the prospect of AI as a disruptive technology, the rebound is even more impressive given the exit from the venture capital market of well-known startups. In 2021, no fewer than eight major startups exited the VC market, including Affirm, Babylon, Darktrace, Exscientia, Recursion, SenseTime, SentinelOne, and UiPath. These startups have a solid value proposition, clear core competencies, and sustainable business models. With the exit of these startups, however, total venture capital funding for AI in the coming years may experience lower or even negative growth.
“These startups have demonstrated the full potential of AI to businesses. They also serve as role models for young AI startups. While the AI market is increasingly crowded, it is still essential for budding startups to hone their value proposition, identify the right niche, develop core competencies, and serve customers well,” concludes Su.
These findings are taken from ABI Research’s 2021 Artificial Intelligence Investment Monitor Application Analytics Report. This report is part of the company’s Artificial Intelligence and Machine Learning Research Service, which includes research, data and analyst insights. Based on in-depth primary interviews, application analytics reports present an in-depth analysis of trends and key market drivers for a specific technology.
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