Venture Funds, Mergers in A.I. Up Sharply in 2018

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18 Mar. 2019. Start-up companies working in artificial intelligence scored sizeable increases in venture financing, and were highly prized acquisition targets in 2018, a new analysis shows. The findings were released today by technology market intelligence company GlobalData, based in London.

GlobalData analysts compiled the data on companies working in artificial intelligence, or A.I., from the company’s database of financial deals, for the years 2014 to 2018. The analysis shows the number of venture funding deals for these enterprises increased from less than 600 worldwide in 2014 to nearly 1,200 by 2018. And the dollar volume of those deals also rose each year, beginning at about $US 2 billion in 2014 to nearly $18 billion in 2018. These gains represent compound annual growth rates of 23 percent for the number of deals and 63 percent for dollar volumes.

From 2017 to 2018, the number of venture capital, or V.C., deals for A.I.-related companies rose sharply, from about 700 in 2017 to nearly 1,200 in 2018. And the dollar volume of those deals also rose markedly, from about $8 billion in 2017 to nearly $18 billion in 2018.

Of the 5 largest venture funding recipients working in artificial intelligence, according to GlobalData, 4 of the companies are based in China: Sensetime, Horizon Robotics, Megvii Technology, and Yitu Technology. Only one non-Chinese company, autonomous vehicle developer Zoox in Foster City, California, made the list. These 5 companies combined raised some $4.7 billion.

During this 5-year period, merger and acquisition activity of companies in the artificial intelligence field also rose, but growth rates were uneven, according to GlobalData. The number of acquisitions remained stable at less than 100 in 2014 and 2015, then rose over the next 2 years to about 150, and jumped sharply to more than 250 deals in 2018. The dollar volume of those merger deals rose steadily from about $4 billion in 2014-15 to some $8 billion in 2016, then dipped to about $7 billion in 2017. In 2018, however, acquisition deal value rose markedly to nearly $20 billion.

GlobalData says U.S. companies were among the leading enterprises making the acquisitions, notably Microsoft, Accenture, Apple, and Google. “A.I.-based technologies,” says GlobalData analyst Aurojyoti Bose in a company statement, “will play a critical role across various industries and business functions in the near future and will continue to draw significant investments from V.C. firms. As a result, major IT companies are also investing in this space to embed A.I. technologies in their existing solutions or new offerings.”

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