Record Number of VC Funds Target AI

AI Startup Funding Part II: Record Number of VC Funds Target AI

Record Number of VC Funds Target AI

Roughly 550 startups whose core activity is artificial intelligence attracted over $5 billion in venture capital funding in 2016, a report by CB Insights reads. It appears that AI startups will receive the lion’s share of VC funding in the next years judging by the rate of growth of VC financing in this tech industry segment. During the time of 2012 to 2016, the number of deals rose from 160 to 658 a year while funding hit a record high of $5.02 billion last year as compared to just $589 million in 2012.

Funding AI

(Image Source: CB Insights)

The chance is good that if you are an AI startup backed by an accelerator or incubator, you are looking for VC funding and eventual IPO as well. VC investors are more than willing to pour their money into promising AI and machine learning companies and there are funds specializing even in backing startups that already enjoy growing customer base and have firmly set their foot in the market.

Corporate VC Funds Trail Other Investors

It also appears that AI-focused venture capital investors have higher risk tolerance compared to other VC funds which are already more selective when investing in tech startups. Nonetheless, every large company seems to have set aside funds to invest in AI – from Toyota to Google to Salesforce among many others. On the other hand, the most active VC investors are not exactly funds set up by large corporations but VC vehicles that specialize in innovative tech. Facebook and Microsoft, for example are not on the list of the most active investors in AI through their respective VC funds.

MOST ACTIVE VC INVESTORS 2012-2016 (Excluding robotics and AR/VR)

Rank

Investor

1

Data Collective

2

Intel Capital

3

Khosla Ventures

4

New Enterprise Associates

5

Google Ventures

6

Andreessen Horowitz

7

Accel Partners

8

SV Angel

9

Plug and Play Ventures

10

Slack Fund

11

Horizons Ventures

12

General Catalyst Partners

13

Norwest Venture Partners

14

Bessemer Venture Partners

15

First Round Capital

16

500 Startups

17

Bloomberg Beta

18

FundersClub

(Source: CB Insights)

Machine learning technologies, smart robots, natural language processing, and computer vision platforms attract most of the total VC funding for companies working in the AI field. Other promising technologies in which VC funds are investing include recommendation engines, virtual assistants, computer vision apps, speech recognition, and gesture control. Categories such as context aware computing, video content recognition, and speech-to-speech translation get the smallest portion of investments.

(Image Source: Venture Scanner)

The Average AI Fund Has Dozens of Startups on Its Portfolio

Let’s return to the most active VC investors in AI.

  • Data Collective has a portfolio comprising over 160 companies.
  • Intel Capital currently invests in some 38 companies working in the field of AI.
  • Khosla Ventures have a diversified portfolio covering various tech categories.
  • New Enterprise Associates boasts active portfolio of over 300 growing businesses in the technology and healthcare sectors. Over 210 NEA-backed companies have gone public.
  • Google Ventures have invested in nine AI startups so far with Cloudera being the most prominent one.
  • Andreessen Horowitz invests in companies covering the entire spectrum of innovative technologies, AI including.
  • Accel Partners have invested in some five AI companies but the number will grow over time.
  • SV Angel have not disclosed their portfolio on their official site.
  • Slack Fund. Once a startup themselves, Slack now run a fund designed to support teams building products on top of Slack.
  • Plug and Play Ventures is investing from $25,000 to $500,000 into over 100 ground-breaking companies every year.
  • Horizons Ventures have invested in a total of 81 companies, some of them AI startups.
  • General Catalyst Partners have managed to date some $3.75 billion in funds invested through eight investment vehicles.
  • Norwest Venture Partners have about 110 active tech companies on their portfolio.
  • Bessemer Venture Partners are investing amounts ranging from $100,000 to $75 million in innovative companies. Some 117 startups backed by BVP have placed an IPO.
  • First Round Capital usually invest from $500,000 to $750,000 in a single startup while their follow-on capital makes 74 percent of the total investment funds at their disposal.
  • 500 Startups will provide $150,000 in seed funding in exchange for 6% of equity.
  • Bloomberg Beta have $150 million under management through two investment funds amounting to $75 million each.
  • FundersClub have invested in about 260 startups with their portfolio being valued at over $7 billion.

As we've discussed, these are some of most active VC investors in AI at the moment. However, many other VC funds are eager to invest in your AI startup whether at an early stage or as growth funding.

The last article of this AI funding series will discuss whether you really need VC or accelerator backing to nurture an AI startup. Bootstrapping is a viable option especially when complemented by some underrated resources that can help you grow your startup.

By Kiril V. Kirilov

Kiril Kirilov

Kiril V. Kirilov is covering IT and business and finance topics as a full-time journalist and freelance writer for over two decades. He also deals with all things content strategy and content marketing.

Kiril analyses all business and new technology trends across the tech industry. He is also founder of a content strategy service.

CONTRIBUTORS

Scale Matters in the Enterprise Cloud

Scale Matters in the Enterprise Cloud

The Enterprise Cloud What used to be an unknown and mysterious term, “the cloud” is now a common and mostly ...
As Enterprises Execute Their Digital Strategies, New Multi-cloud Landscape Emerge

As Enterprises Execute Their Digital Strategies, New Multi-cloud Landscape Emerge

The Multi-cloud Landscape The digital universe is expanding rapidly, and cloud computing is building the foundation for almost infinite use ...
Cloud Services Are Vulnerable Without End-To-End Encryption

Cloud Services Are Vulnerable Without End-To-End Encryption

End-To-End Encryption The growth of cloud services has been one of the most disruptive phenomena of the Internet era.  However, ...
Chris Gerva

Why Containers Can’t Solve All Your Problems In The Cloud

Containers and the cloud Docker and other container services are appealing for a good reason - they are lightweight and ...
10 Ways The Enterprise Can Prevent Data Leaks In The Cloud

10 Ways The Enterprise Can Prevent Data Leaks In The Cloud

Prevent Data Leaks In The Cloud More companies are turning to the cloud for storage. In fact, over 60 percent ...
Countdown to GDPR: Preparing for Global Data Privacy Reform

Countdown to GDPR: Preparing for Global Data Privacy Reform

Preparing for Global Data Privacy Reform Multinational businesses who aren’t up to speed on the regulatory requirements of the European ...
The Five Rules of Security and Compliance in the Public Cloud Era

The Five Rules of Security and Compliance in the Public Cloud Era

Security and Compliance  With technology at the heart of businesses today, IT systems and data are being targeted by criminals, ...
Safeguarding Data Before Disaster Strikes

Safeguarding Data Before Disaster Strikes

Safeguarding Data  Online data backup is one of the best methods for businesses of all sizes to replicate their data ...
What You Need To Know About Choosing A Cloud Service Provider

What You Need To Know About Choosing A Cloud Service Provider

Selecting The Right Cloud Services Provider How to find the right partner for cloud adoption on an enterprise scale The ...
Financial Management Finds a Welcome Home in the Cloud

Financial Management Finds a Welcome Home in the Cloud

Cloud Based Financial Management The most cautious person in any organization is likely to be the CFO. After all, they’re ...

NEWS

U.S. IT Sector Employment Expands by 8,100 Jobs in November, CompTIA Analysis Reveals

U.S. IT Sector Employment Expands by 8,100 Jobs in November, CompTIA Analysis Reveals

DOWNERS GROVE, Ill., Dec. 8, 2017 /PRNewswire-USNewswire/ -- New hiring in computer and electronics manufacturing and technology services and custom ...
email as a service

Google Data Analysis, Artificial Intelligence and Predicting Vaccine Scares

Social media trends can predict tipping points in vaccine scares Analyzing trends on Twitter and Google can help predict vaccine ...
Deloitte TMT Predictions: Machine Learning Deployments, On-Demand Content and Live Events Will Continue to Drive Growth

Deloitte TMT Predictions: Machine Learning Deployments, On-Demand Content and Live Events Will Continue to Drive Growth

NEW YORK, Dec. 12, 2017 /PRNewswire/ -- Deloitte forecasts double digital growth in machine learning deployments for the enterprise, an increasing worldwide ...