With close to driverless cars, robots to automate menial tasks, smart virtual assistants to solve your doubts in milliseconds or robots to map diseases, AI is the heart of most intelligent products and services today. The global AI market was valued at $62.35 billion in 2020 and is only expected to develop at a compound annual growth rate of 40 per cent in the next decade. Given this colossal maturation, it comes with no surprise that VC firms are investing in the technology at a heavy pace.
VC investors across public and private sectors are becoming increasingly interested in having their share in this tremendously growing sector. PWC’s 2020 Money Tree Report outlined AI as an emerging area in the market, with $11.5 billion being invested in AI companies during the first three quarters of last year.
According to the VC Investments in AI between 2012 to 2020 report from the Organization for Economic Cooperation and Development (OECD), the investments in AI companies have grown by 20 per cent just in the last year. These have been focused on three key AI sectors. The first is driverless vehicles and mobility technologies, followed by healthcare applications and biotechnology. Finally, digital transformation saw the third-highest investments, most likely due to the pandemic.
We break down some of the top VC firms investing in the technology and helping shape the future market today.
Sequoia Capital
Sequoia Capital is a California based technology-focused VC company founded in 1972. The company had the highest number of investments in the AI tech space in 2020, participating in 52 VC rounds in both public and private firms. They focus on private company incubation and seed and start-up stage investments, daring entrepreneurs to build the leading companies of tomorrow. Last year, during the pandemic, the company announced a US $7 billion fundraiser to back its venture capital initiatives for US and South-East Asian technology start-ups. Their portfolio includes BasisAI, an AI company building scalable ML products for Asian enterprises, and Nugit that combines AI with NLG to transform marketing data into decision-ready reports.
Softbank Group
The Japan-based multinational holding company, Softbank, is run by Japan’s richest man, Masayoshi Son. The tech entrepreneur has claimed to devote 97% of his time to AI development and primarily invests in energy technology and financial companies. The company’s Softbank Vision Fund for technological development is the largest private equity fund adding up to $93 billion. Softbank’s portfolio consists of top companies like Byte Dance, Cars 24, Cameo, Flipkart, Lenskart, Swiggy and Policy Bazaar. They have funded AI companies such as Innovation, which provides full-stack-based AI products and solutions; Oosto, an organisation utilising computer vision to provide security; and Clarity AI, which leverages AI to provide tech-based sustainable solutions for investment and lifestyle.
M12
Previously known as Microsoft Ventures, M12 is the corporate division of Microsoft acting as a VC fund. The company invests in early-stage enterprise software companies along with applied AI projects. While the firm started with investments in North America and Israel, they now have offices across the globe in cities like San Francisco, Seattle, London, Tel Aviv, and Bengaluru. In addition, the company goes one step ahead with working with B2B businesses as partners and not just fund providers. This allows the companies to leverage Microsoft’s expert and academic resources fully. M12’s portfolio includes Private AI, a company developing ML and NLP tools to protect privacy, Tact AI, an AI-powered customer engagement platform and Unbabel, an AI-powered human translation platform. In the latest news, Microsoft purchased health tech AI company Nuance for $19.7 billion transactions, the company’s second-largest to date.
Accel
Accel has been in the VC field for over 30 years, investing in start-ups in seed, early and growth stages. With the experience supporting their decision making, the company has an intensive track record of identifying future talent and leading businesses. Accel is one of the most active VC firms in Silicon Valley and has invested in companies with AI functions ranging from cybersecurity to big data and home automation. The businesses supported by them include today’s pioneering companies like Facebook, Bumble, Fresh Works, Dropbox, Etsy, Spotify, and Slack. Their portfolio includes Cognite, a global SaaS company providing enterprises with the support to transform them digitally, Scale AI, a company building infrastructure to accelerate access to AI technology and Ada, an AI-powered CX platform for customer engagement.
Source Code Capital
In less than a decade, the China-based VC firm Source Code Capital has made a name for itself in the investment world by primarily focusing on AI and Fintech companies. They have emphasised the Big 3 drives for business growth: internet, AI, and global. Source Code Capital has invested in over 300 early to middle staged companies. It has many AI entrepreneurs under its wing, for whom they offer networking opportunities, resource collaboration and value addition to the firms. They have invested in companies like Che300 that collaborates AI with data mining to improve the accuracy of vehicle evaluation, and Mor.ai, an AI company with core cognitive computing and NLP, to provide a one-stop conversation robot.
Andreessen Horowitz
Andreessen Horowitz is one of the most esteemed VC firms in the AI sector after having seven funds to raise almost $7 billion. With the tagline ‘Software is eating the world’, the company’s focus is to invest in technology entrepreneurs in developing their start-ups. The company also provides expert guidance to business development and engineering companies. Andreessen Horowitz started in 2009 with investment in companies such as Freenome AI that uses AI to develop a diagnostic test for early detection of cancer; Dispatch.ai, an autonomous vehicle-powered delivery platform and Wit.ai, an NLP interface for applications. They also have a dedicated bio fund towards the development of AI to provide medical aid.
Y Combinator
Y Combinator is a 2005 founded American start-up, popularly tagged as a business incubator. The VC firm has an effective model to identify and invest in small but potentially successful companies. They have leveraged the same to launch over 3000 companies, including popular ones such as Airbnb, DoorDash, Stripe, Instacart, Reddit and Twitch. The company invests close to $150k twice a year in start-ups, after which they train the companies on structuring their start-ups successfully in the Silicon Valley for three months. Their successful AI investments include LyreBird, a voice synthesising AI company, msg.ai, an AI-powered customer support engagement platform, and Airo health, an AI to track and manage one’s mental health.
GV Management
GV Management is Alphabet Inc’s VC firm, previously known as Google Ventures (but the company works independently of Google now). They provide funding to companies in the seed, venture, and growth stages. These technology companies are set across sectors focusing on enterprise, life sciences, consumer, and frontier technology. The company has funded over 500 start-ups and firms and provides their companies with a team of engineers and data scientists who work side-by-side to further their business growth. Their success stories include Uber, Medium, Lemonade, Slack and Gitlab. The AI firms they support include Mighty AI, a company generating data sets to train AI, and Determined AI, which reduces time-to-market by improving GPU utilisation.
Intel Capital
Another VC firm funded by their larger corporation is Intel that invests in technology start-ups across sectors, global investments, acquisitions and mergers. Their key companies offer services/ products in hardware, software, AI, autonomous technology, data centre, cloud, 5G, and semiconductor manufacturing. In close to 30 years, the company has invested in close to 1300 companies across 50+ countries. These include AI companies such as Beep that provide intelligent AI-powered autonomous mobility as a service, and Horizon robotics, an edge AI computing platform for intelligent vehicles.
General Catalyst
2000 found American VC company, General Catalyst, provides early-stage and growth equity investments to transform companies. They invest in outstanding entrepreneurs who have already made a name for themselves in the technological market. The company focuses on providing momentum and accelerating the growth of the companies. Some of their companies include Grammarly, an AI-based writing assistant; Eightfold.ai, an AI-based talent management platform and 6D.ai, software to build API stimulating real life.
With the rise in investment and attention towards AI, it is important to remember that the technology is still developing with huge scope to better its trustworthiness, responsibility, and ethical aspects. That being said, it is also critical to note that AI is not here to displace humans; it is here to empower and support us.
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