U.S., China Surge AI Venture Investment
Surprise! Venture capital funding in AI is heating up – sorry, continuing to heat up – hitting a record high in 2018, according to GlobalData, a data and analytics company. The top 10 VC investors took part in 150 AI funding rounds, a jump of 67 percent over the 2014-2017 average, GlobalData said, with eight of the global top 10 VC investors in AI located in the U.S.
The U.S. and China combined totaled more than 60 percent of the total VC investment and around 80 percent of the total investment in 2018. Of the top 10 VC investors, only IDG Capital and Baidu Ventures were non-U.S. companies. Of total investments, activity by the top 10 VC investors increased by 121 percent last year compared to 2014-2017, according to GlobalData.
“Though the U.S. topped in terms of the number of VC investments,” GlobalData said, “the country’s share of investment volume decreased from 55.7 percent during 2014–2017 to 44.3 percent in 2018. On the other hand, AI start-ups in China registered an increase in the share of investment volume from 4.6 percent during 2014–2017 to 17.9 percent in 2018.”
Similarly, the firm said, American AI start-ups’ share of total investment value decreased from 64.1 percent during 2014–2017 to 46.3 percent in 2018; in China, AI start-ups saw an increase in investment value share from 14 percent in 2014-2017 to 32 percent in last year.
“On the back of decades of federal research funding, best-in-class talent pool and corporate initiatives, the US remains at the forefront of the VC investment AI space,” said Aurojyoti Bose, financial deals analyst at GlobalData. “However, it lacked any federal-level national policy agenda on AI until February 2019, when President Trump launched the American AI Initiative program. On the other hand, several countries, including China, were ahead in releasing their AI development roadmaps and committed billions of dollars towards it.”
The top 10 global VC investors, according to GlobalData, are Sequoia Capital, Intel Capital, Lightspeed Venture Partners, Accel, IDG Capital, Y Combinator, Baidu Ventures, Battery Ventures, First Round Capital and New Enterprise Associates. Sequoia totaled the most investments and proportionate investment value in 2018, said GlobalData, while Baidu Ventures achieved the highest growth in the number of investments and proportionate investment value last year over the 2014–2017 average.
GlobalData noted that “China is working on its goal of becoming a global AI leader by 2030. According to the 2018 China Artificial Intelligence Development Report, the country has the highest number of AI patents and also ranks second in terms of AI companies count.”
“With the launch of American AI Initiative, the competition between the US and China is likely to become fiercer,” said Bose. “As a result, the global AI space is expected to witness a growth in the number of start-ups, which in turn will result in strong VC investment activity.”