According to global technology market advisory firm ABI Research, funding in AI through venture capital fell by 33.9% in 2020 compared to 2019. This and many other findings come from the firm’s 2020 AI investment analysis report. Several interviews were conducted and the document presents an analysis of the main trends and drivers of the technology market.

Venture capital investments in artificial intelligence down for the year 2020

A drop of almost 34% has been identified in the AI venture capital investment scene in 2020. A total of $15 billion was raised during this year, a figure significantly lower than 2019. This is the first global decline in AI funding since 2012. However, Lian Jye Su, senior analyst at ABI Research, says that in 2021, the figure is expected to rise again:

“2020 will be seen as a slight hiccup for an otherwise steady increase in AI investment. The demand for AI is constantly expanding into new frontiers. As such, venture capital funding for AI is expected to see a strong rebound in 2021. As of June 2021, the total investment for AI startups is about $14.5 billion, already approaching the 2020 amount, and is very likely to exceed the 2019 Figure.”

Of the major factors, the Covid-19-related health environment is the most impactful. Venture capital rounds have been curtailed due to actions taken by various governments around the world. Venture capitalists have also avoided deals due to the uncertain macroeconomic environment. In addition, some AI startups with mature business cases strategically stayed out of funding rounds in 2020, only to return in 2021.

Startups looking to raise in AI have had to adapt to the Covid-10-related health environment

At the same time, the US-China trade dispute has dampened investor enthusiasm. US investors have chosen not to invest in Chinese AI startups. Many Chinese AI startups have faced challenges in expanding their presence in the US. Lian Jye Su elaborated on the nature of the startups that invested in 2020:

“Unsurprisingly, the US dominated the top 20 list with 13 AI startups, such as Affirm, Aurora, DataRobot, Nuro, Pony.ai and TuSimple. All of these startups have introduced cutting-edge AI features into a wide range of industries, from finance to automotive, logistics, healthcare, AI chipsets and business administration.”

Automation and augmentation tools for remote work and collaboration, implementation of remote and health monitoring protocols, and prevention of cybersecurity threats have been promoted by COVID.

Global economies have focused on industrial AI startups

In the face of supply chain disruption, leading economies around the world have advocated for domestic companies to diversify their supply chain strategy, while reinvesting in domestic manufacturing capabilities. These have led to a reliance on industrial AI startups that offer digitization and analytics tools, such as Augury, COSMOPlat, FogHorn and SmartMore.

Let’s take a few examples: at the root of all these AI developments is the increasingly diverse industry of turnkey AI chipsets, software and services. Edge Impulse offers subscription as a service (SaaS) and turnkey services for the development of Tiny Machine Learning (TinyML).

More than 10 AI chip providers received venture capital funding in 2020, each focusing on a niche. For example, Israel-based Hailo focuses heavily on industrial applications, Syntiant and AIStorm in ultra-low power machine learning, and Horizon Robotics and ECARX in autonomous vehicles.

As the health environment continues and even as investment picks up, global economies are expected to continue to diversify with a focus on industrial AI startups.

Translated from Comment les start-up se sont adaptés à la baisse des investissements dans le monde de l’intelligence artificielle ?