Artificial Intelligence Investments On The Rise On Growing Global Interest

Investments targeting artificial intelligence innovations as well as developments are on the rise. Venture capital firms, investment funds and corporate investors, are increasingly stepping up equity investments around the emerging technology, signaling growing global interest.

Growing AI Investments

AI equity investments are on the rise the amount of private equity having doubled between 2016 and 2017. Between 2011 and 2018 more than $50 billion found its way into the burgeoning sector; mostly targeting startups, which are working on breakthrough innovations.

A spike in AI investments underscores the fact that investors are becoming increasingly aware of the technology’s potential in revolutionizing various sectors.  AI startups are attracting as much of 12% of the global private equity investments, a steep increase from just 3% as of 2011.

While startups in the U.S account for a huge chunk of private equity investments, Chinese researchers are also increasingly drawing a huge amount of AI investment money.  China has experienced an upsurge on AI investment from just 3% as of 2015 to 36% as of 2017.

The European Union accounted for 8% of global AI equity investment in 2017, representing a massive increase from just 1% as of 2013.  As member states varied widely, the United Kingdom continues to account for a huge chunk of AI investments in the region, at 55%, followed a distant second with Germany at just 14% and France at 13%.  The fact that more than 20 European countries share less than 20% of AI investments underscores the disparity.

Combined, the United States, China, and the European Union attract over 90% of the global AI private equity investment. The likes of Israel and Canada account for just 3% and 1.6% respectively.

The number of AI investment transaction is also on the rise having grown from less than 200 deals as of 200 to highs of 1400 as of the end of 2017.  The 35% annual growth should continue to increase as investors and researchers come to terms with the potential impact of the revolutionary technology.

Countries Investing Big on AI

China is no longer going to lay low as other countries take credit in AI innovations. In 2017, the country’s government announced plans to make the country a hub for AI technologies by 2030. The government has since established a $30 billion venture capital fund in Shenzhen.

The fund is to go towards funding technological innovations around AI and other related technologies as the country seeks to create an industry worth more than $150 billion. One Chinese state has already committed $5 billion to develop AI technologies as the City of Beijing gears to set up a $2 billion AI-focused industrial park.

The U.S government is not as aggressive as the Chinese government is in spearheading AI investments. The U.S has so far focused on financing AI innovations around the defense industry, which are still dwarfed by the Chinese effort. The Department of Defense has set aside $2 billion to spur AI technologies in universities and companies.

Even on the government sector going slow on AI investments, the private sector in the U.S appears to be doing its part. It is for this reason that the U.S ranks ahead of the crowd when it comes to AI investments as well as innovations.

The U.S plays host to more AI firms than any other country in the world. The fact that the country plays host to some of the biggest technology companies has helped safeguard its competitive edge on AI innovation.

The likes of Google, Apple, Facebook, Microsoft, and Amazon spent approximately $54 billion on research development, most of which went towards AI research in 2015. The amount has only increased as the companies have already come up with products leveraging the groundbreaking technology.

Concerned by the threat posed by U.S companies on AI research and development, the Chinese government has asked its four large tech companies Baidu, Tencent, Alibaba and iFlytek to come up with AI hardware and software systems for handling language processing as well as autonomous driving.

U.S tech companies have spearheaded much of the AI technology research efforts.  The fact that these companies do not need AI researchers to work from the U.S has allowed them to achieve significant progress on AI innovations.

Google, for instance, has set up AI labs in Toronto, Montreal as well as London and Paris. Facebook has also deployed the same model, having pumped $12 million for an AI lab in Canada. Amazon is in the process of setting up an AI lab in Germany. Google and Microsoft have also teamed up with Chinese startups like Malong to spur AI innovations in China.

With only 8.5 million citizens, Israel is ranked third when it comes to AI solutions and innovations. The country has about 11% of the total AI companies in the world and has 40x more AI companies per capita than the U.S.

Israel leadership on AI innovation has to do with the close connectivity of the military and the digital sector.  The fact that the country also plays host to quality universities for research, as well as a robust entrepreneurial ecosystem, has helped the country maintain an edge on AI innovations.

The U.S and China are not the only countries spearheading AI research and development efforts.  Germany, known for its technical know-how, is also keeping up with the pack. Berlin is increasingly becoming a hub for AI talent as the country seeks to become a leader on robotics and autonomous vehicles as well as quantum technology.

The country’s chancellor has already reiterated the need to compete with China when it comes to AI. While the government is, yet to commit big investment on AI, tech companies are stopping at nothing as they seek to gain an edge while leveraging AI.

The United Kingdom is another country trying to catch up to the U.S and China on AI innovations as well as investments. The government has already forged a deal between the public and private sector that will result in more than $200 million worth of AI investments.

The U.K government, on its part, has committed $30 million to go towards the building of AI tech incubators. Venture capital firm Global Brain has pledged $50 million, and Chrysalix has committed more than $100 million.

In addition to finances, the U.K government is to take an active role in funding academic research as it seeks to gain access to the best AI talent and skill set.

Canada became the first country to register an active government role in AI research. In 2017, the government pledged $125 million to Spur AI innovation and technologies. Over $1.3 billion has so far been announced for research and development since 2016. Government involvement comes on growing concerns that the country will lag behind the likes of the U.K and China on AI.

As it stands, Montreal plays host to the highest concentration of researchers and students focused on AI and deep learning.  Toronto, on the hand, plays host to the highest concentration of AI startups.

The France government, on its part, is to invest up to $1.8 billion in AI research until 2022. The country’s AI initiative will focus on data. The country is also to partner Germany as part of an effort of accelerating AI research activities.

AI Investment Breakdown by Category

A good chunk of investments around artificial intelligence is finding its way into financing the development of machine learning. Investments are increasingly going towards machine learning, as the race to create machines able to think act and react better than a human is heating up.

Machine learning has especially found great use in powering autonomous vehicles. As early as 2015, AV accounted for just 5% of total AI investments. By 2017, the figure had skyrocketed to 23%. By mid-2018, autonomous vehicles accounted for more than 30% of AI investments.

Startups working on enhancing computer vision come a distant second when it comes to AI investments. Such startups are leveraging AI in a bid to make computers gain a high-level understanding of digital images and videos.

Smart robotics comes in third when it comes to the number of artificial intelligence investments it draws.  Startups are increasingly coming up with smart robots that can learn from the environment and build capabilities based on knowledge thanks to increased funding.

In the future, smart robots will collaborate with humans in a working environment to perform even the most complicated tasks. A perfect example of a smart robot is Baxter, which is an industrial robot that works side-by-side humans on factory floors to perform repetitive tasks.

Virtual agents able to perform routine customer service are becoming increasingly popular thanks to increased investments on AI. A virtual agent is an AI-powered program capable of providing automated customer service.

Virtual agent software has improved a great deal thanks to advances in AI and cognitive computing programs.  Unlike in the past, modern virtual agents can understand customer intent and provide personalized answers to customer questions.

Takeaway

The possibilities of artificial intelligence are endless as researchers, companies and countries race against time to explore the technology’s capabilities. An increase in investments should lead to better and refined AI applications able to enhance people’s quality of life as well as enhance the delivery of products and services.

Resources

• https://www.etftrends.com/innovative-etfs-channel/is-investing-in-artificial-intelligence-etfs-a-smart-idea/
• http://www.oecd.org/going-digital/ai/private-equity-investment-in-artificial-intelligence.pdf
• https://emerj.com/ai-sector-overviews/venture-investments-in-artificial-intelligence-trends/
• https://www.thetechedvocate.org/six-countries-leading-the-ai-race/
• https://priceonomics.com/which-industries-are-investing-in-artificial/
• https://whatis.techtarget.com/definition/smart-robot