Artificial intelligence (AI) startups have seen significant investment in recent years, as investors see the potential for AI to disrupt a wide range of industries. Correspondingly, as a patent attorney in Silicon Valley for the past 20 years, I found that virtually all my recent patent applications involve some aspects of deep learning. Here are a few trends that I see through my work with clients in investment for AI startups:
- Increasing amounts of funding: AI startups have been attracting increasing amounts of funding in recent years, with many startups raising tens or even hundreds of millions of dollars in funding rounds.
- Wide range of industries: AI startups are working on a wide range of applications, including healthcare, finance, logistics, transportation, and manufacturing. This has led to a diverse range of AI startups, each working on a specific application or industry.
- Large companies and venture capital firms are investing: Large companies and venture capital firms have been investing in AI startups, recognizing the potential for AI to disrupt a wide range of industries. This has led to increased competition for AI startups to secure funding.
- Growing interest in specific areas: There has been a growing interest in specific areas such as computer vision, natural language processing, and reinforcement learning, which are considered key building blocks for AI.
- Geographical focus: The trend is showing that the majority of the investment is concentrated in North America, particularly in Silicon Valley, with a smaller amount in Asia, particularly China and a smaller amount in Europe.
Overall, the investment trend for AI startups suggests that AI is becoming an increasingly important area for investment, with a wide range of industries and applications attracting significant funding. As the technology continues to evolve and mature, it’s likely that investment in AI startups will continue to grow in the future.
According to Fortune Business Insights’ recent report, titled “Artificial Intelligence Market Forecast, 2022-2029,” the global AI market size is projected to grow from USD 387.45 billion in 2022 to USD 1394.30 billion in 2029 at a CAGR of 20.1% in the forecast period. For perspective, the global market size was USD 328.34 billion in 2021.
The rising demand for artificial intelligence technology across various induce verticals such as a retail, BFSI, healthcare, food and beverages, automotive, and logistics is significantly contributing towards the growth of the global market. The artificial intelligence market share is segmented into software, hardware, and services.
By function, the market share is broken down into marketing & sales, human resources, product/service deployment, risk, service operation, supply-chain management, and others. The others segment is bifurcated into corporate finance and strategy.
Key Companies Operating in the Artificial Intelligence Market are:
- Amazon, Inc. (Washington, U.S.)
- IBM Corporation (New York, U.S.)
- Microsoft Corporation (Washington, U.S.)
- Salesforce.com Inc. (California, U.S.)
- Alphabet Inc. (Google LLC) (California, U.S.)
- NVIDIA Corporation (California, U.S.)
- Baidu, Inc. (Beijing, China)
- SAP SE (Walldorf, Germany)
- Oracle Corporation (Texas, U.S.)
- Hewlett Packard Enterprise Company (Texas, U.S.)
- SAS Institute Inc. (North Carolina, U.S.)
Artificial intelligence is used in all areas of business, including self-driving vehicles AI operating systems and self-learning language processing platforms. Venture capital firms are jumping on board to finance the innovators, as they have the potential for disrupting many industries.
Artificial intelligence (AI) startups have been filing patents for a wide range of technologies and applications, with some key trends emerging in recent years. Here are a few examples:
- Natural Language Processing: Many AI startups are working on natural language processing (NLP) technologies, such as speech recognition, text-to-speech, and machine translation. These technologies are used in a wide range of applications, from virtual assistants to language learning software.
- Computer Vision: Computer vision technology is another area that is attracting a lot of interest from AI startups. This technology allows computers to understand and interpret visual data, such as images and videos. Applications include self-driving cars, security cameras, and medical imaging.
- Reinforcement learning: Reinforcement learning is a type of machine learning where an agent learns to make decisions by interacting with an environment. It is used in a variety of fields such as robotics, gaming, and finance.
- Generative models: Generative models are a type of deep learning algorithm that can generate new data that is similar to a training dataset. This technology has many possible applications, such as creating realistic images or videos, and generating text.
- Edge computing: Edge computing is the ability of devices to process data locally, without relying on a centralized server. This technology is becoming increasingly important as the amount of data being generated by IoT devices continues to grow.
In general, AI startups are filing patents for a wide range of technologies and applications, reflecting the diversity of the field. These patents are focused on the core technologies of AI such as machine learning, computer vision, and natural language processing, as well as specific applications in various fields. It is important for startups to protect their IP in order to maintain a competitive advantage in the market.
Patents can be valuable assets for AI startups, as they can provide a way to protect and monetize the technologies that the startup has developed. Here are a few ways that patents can add value for AI startups:
- Competitive advantage: Patents can provide a competitive advantage by preventing competitors from copying the startup’s technology, which can help the startup maintain a leading position in the market.
- Revenue streams: Patents can be licensed or sold to other companies, providing a source of revenue for the startup. This can be particularly valuable for startups that have developed a technology that is in high demand.
- Attracting investment: Patents can be used to demonstrate to investors that the startup has a strong intellectual property portfolio, which can make the startup more attractive to potential investors.
- Strategic partnerships: Patents can be used to secure strategic partnerships with other companies, allowing the startup to access new markets or technologies.
- Defensive tool: Patents can also be used as a defensive tool, allowing the startup to challenge patents held by competitors that may be blocking the startup from entering a market.
It’s important to note that obtaining patents can be a costly and time-consuming process, and not all AI startups will have the resources to pursue patents. However, for startups that have developed a technology that is likely to be in high demand, patents can be a valuable asset that can help the startup to protect and monetize its technology. Our patent attorney can help you assess the validity of the patent and the chances of success of the patent application.
It is important to keep in mind that, despite increasing interest and investment in AI technology, ethics, accountability and reliability still have a lot of work to do. It is important to remember that AI doesn’t exist to replace human beings, but to empower and assist them. If AI is your niche, here’s a look at venture capitalists investing in AI (artificial Intelligence) companies.
Softbank Group, a Japanese holding company, is a global holding firm. Masayoshi son, the richest man in Japan, claims that he spends 97% of his time and intellect on AI research. The Softbank Vision Fund id specifically dedicated to technical advancement and this fund strongly emphasizes AI. They previously invested in SenseTime Inc., a company that specializes in scaling machine learning, face recognition and augmented reality.
General Catalyst was founded in 2000. It is an American venture capital company that offers early-stage equity investments and growth to assist businesses with their transformation. This firm is dedicated to accelerating companies’ development and giving them momentum. They invest in entrepreneurs who are already successful in technology. Grammarly, an AI writing service, Eightfold.ai, a platform for personnel management, and 6D.ai are just a few of their companies. These programs allow them to create APIs that encourage real-world activity.
Institutional Venture Partners
IVP is a US-based private equity firm that often contributes funds to companies in their final stages of growth. After investing in many well-known companies such as Slack and Pindrop, Soundcloud and Indiegogo, IVP has become a major investor in AI startups. IVP funded Sumo Logic (a machine data analytics company) and ZipRecruiter (one of the top five AI ventures to be funded in 2018.
Two Sigma Ventures
Two Sigma Investments is the largest firm. Two Sigma Ventures is its subsidiary. Their early-stage capital is used to expand knowledge and improve computing power in order to benefit the entire world. They invest in innovative companies that improve access to information, expand the capabilities of science and technology, and have forward-thinking and inspiring executives. Zymergen, an AI program that enhances biological manipulation, was one of their investments. Socore, a predictive analysis program, and Amper Music (an AI program to create music in films based upon the emotional mapping), are two of their investments.
Lightspeed Ventures, a US-based venture capital firm, offers early-stage investment in research and development in the consumer and tech industries. Their portfolio includes many well-known startups and tech companies that were eventually purchased by Walmart, Texas Instruments and Blackberry. FortressIQ is a company that develops an enterprise bot governance layer and AnyVision, which is the best face, body and object recognition AI software.
Intel Capital is a division within Intel Corporation that manages acquisitions and invests into various technology startups. Intel Capital was established in 1991 and has invested more than $1280 million in 54 countries. Their investments include Syntiant which is a manufacturer and distributor of neural decision-making devices that speed up computer operations and require less power. Gamalon, which teaches computers using machine learning, was also among these investments.
Andreessen Horowitz, which is known for its slogan “Software is devouring all the world”, is one of AI’s most prominent venture capital firms. The company was established in Silicon Valley, California in 2009. It invests in every stage of a company’s growth. Their large team of executives, academics, and engineers provides professional guidance. Andreessen Horowitz was the leader of the effort to fund $30M for People.ai. They also have a bio fund to advance AI in the medical industry, which aids in diagnosing and treating diseases. Two other significant investments are Shield AI, which is an AI program that can be used for intelligence, surveillance and reconnaissance, as well as Freenome, which is an AI program to improve immune system comprehension.
HTML3_ Data Collective
Data Collective holds the record for most investments in this industry, having invested in 20 AI companies since 2012. Data Collective prefers to focus on Big Data firms, even though they finance entrepreneurs who use this technology at a global scale. Vicarious is an initiative that models the human brain using data to create artificial intelligence. Plenty is an agritech company that uses AI to cultivate GMO and pesticide-free crops. Recursion Pharmaceuticals uses cell activity data to treat illness. There are many.
Y Combinator is also known as a business incubator. Their strategy is great for investing modestly in innovative businesses that focus on machine learning and artificial intelligence. They invest $250k per company twice a year in companies. The team is required to move to Silicon Valley for three month to work with Y Combinator’s specialists. They will mentor and help the team structure the startups. Y Combinator has a fund for artificial intelligence (AI) that includes self-driving shuttle company May Mobility and voice-synthesizing AI Lyre Bird. It also has a corporate customer engagement tool Msg.ai.
Toyota AI Ventures
The venture capital fund of this Toyota subsidiary invests in AI projects in robotics, and autonomous transport. The fund emphasizes its ability provide professional guidance and direction through its team of businesspeople and scientists. Apex AI is a software platform for autonomous mobility vehicles. Perceptive automata software that aids autonomous cars in perceiving human emotion and Elementary Robotics robots for homecare.
HTML12 AI Fund
M12, previously Microsoft Ventures is a large fund that invests in artificial intelligence. Established in 2016, the company invests in projects in Israel as well as North America. M12’s Rota gives firms unparalleled access to Microsoft’s ecosystem. This allows them to access many experts, researchers, and other resources that can help with their AI projects. M12, which is a specialist in early-stage financing, is looking for B2B companies to partner with and fund. TwentyBN, which helps robots learn human mannerisms and interact with humans safely, is one of the projects that has had the privilege to work with M12. Contract Security is a program to protect against malware and Mental Canvas is a program to bridge the gap between 2D- and 3D images.
Sequoia Capital, a California-based venture capital firm that focuses on technology, was founded in 1972. The business has received the largest investments in the AI technology sector by participating in 52 VC rounds at both public and private companies in 2020. They encourage business owners and entrepreneurs to build the best corporations possible by focusing on incubation, seed and startup investment. The company has venture capital activities for US-based and Southeast Asian technology startups. They also have Nugit, which combines AI and NLG to transform marketing data into reports that can be used for decision-making. This AI startup creates scalable ML solutions that can be used by Asian businesses.
GV Management, formerly Google Ventures is Alphabet Inc’s venture capital division. However, the company operates independently from Google. Over 500 startups and firms have received funding from the organization. The company also has a team of data scientists and engineers who work together to help their companies succeed. Companies may be able to receive money from them in the venture, seed, and growth stages. These firms can be found in many industries that focus on business, health sciences, consumers and emerging technologies. Examples of their achievements include Uber, Medium and Lemonade, Slack and Gitlab. They make it possible for AI businesses such as Mighty AI which creates data sets to train AI and Determined AI which reduces time-to market by optimizing GPU usage.
They invest in deep tech during the Seed, Series A and Series B stages of development. Investing has been primarily focused on processing, communications, algorithmic advances, and imaging software. Baidu Inc. is the largest Chinese search engine. It has a division called Baidu Ventures. This division supports AI, VR, AR, and other initiatives. Baidu Ventures’ scale is a significant benefit to financed companies as it allows them access outstanding data annotation, system designs, and engineering capabilities. Baidu Ventures is a global leader in AI and has its own language processing, smarthome, machine learning and telecom AI systems. It also established an AI research center in Silicon Valley in 2013. Two businesses were recently acquired by them: Veo Robotics which offers tools for industrial robot cooperation and Aqrose Technology which uses machine learning to improve industrial operations.
Comet Labs is an incubator that also invests in AI and robotics companies. Comet Labs was founded in 2015 and aims to improve productivity by developing robotics and AI. They also work with experts in the field to offer entrepreneurs a place where they can learn and improve their commercial skills to support their technology idea. They have invested in companies that create AI for various industries such as transportation, building, agriculture and healthcare. There are several exciting initiatives they are currently working on, including Creator, which uses robots to make gourmet burgers and Iron Ox which uses robotic greenhouses for food production. Prenav is an autonomous commercial drone that can fly in hostile environments.
East Ventures, a Japanese venture capital firm, provides seed money for startups in Japan and Southeast Asia. Their track record includes the acquisition of prominent businesses in SEA by their startups, such as Grab’s acquisitions of Kudo or Groupon’s purchase Disdus. TARA is an AI tool for product scoping, and talent assignment. Recent AI innovations include Kite, which adds all of the internet programming information to your programming environment. Vision software for object recognition and face recognition are also examples.
CRV is one of the first VC firms in the US. They have been investing in technology for over 40 years. Their investments include everything from mobile phone towers to applications. The team is made up of entrepreneurs and business owners who see themselves as equals in collaboration and have the same voice within the company. They are hardworking and quick, but they all make the same decisions together. They are currently working on 3T Biosciences an AI initiative to treat Cancer, Airobotics a business that analyzes aeronautical data and Jibo, which is a home robotics for families.
Qualcomm Ventures was founded in 2000 and has invested in startups providing technical innovations to help Qualcomm Inc. grow as a producer and designer of wireless telecommunications equipment and systems. They have made 331 investments since its inception and offer capital at the Seed and Early stages of fundraising. Elevoc, an AI-learning hearing aid, is one of these investments. Prospera is data-driven AI to support agricultural and climate development. Cruise, AI software that can self-driving robot-taxis, is also included.
Vinod Khosla was a co-founder at Sun Microsystems. He founded Khosla Ventures back in 2004. It focuses mainly on green technology investments. It does however venture into other areas. Khosla Ventures is a Silicon Valley-based venture capital firm that seeks out businesses that can create more efficient solutions than the ones we have now by using technology and new business structures. They are focused on the “Black Swan” concept, which provides creativity that is beyond what is usually expected. Ayasdi is an AI tool that helps businesses sort through complex data to find useful answers. Artrendex is an AI solution for the art industry.
Golden Gate Ventures was founded in 2011 and invests in Southeast Asian startups. Golden Gate Ventures has invested in more than 30 companies across seven Southeast Asian countries. It focuses its funding mostly on internet- and mobile startup operations that improve payment, ecommerce, SaaS and marketplace operations. They have supported dynamic initiatives such as Carousell, an Asian online marketplace, Skelter Labs in Korea, which creates AI-driven virtual assistant technology, Perx, an AI consumer intelligence program and loyalty program, and Carousell.
Accel, a venture capital company with a lot of experience, was founded in 1983. Accel has 30 years of experience and chooses companies to be part of their portfolio based on how they will help them into the next generation. Accel is a remarkable investor who has invested in companies such as Dropbox, Etsy and Spotify.
Since its inception in 1988, Highland Capital Partners has been around the block several times. HCP has offices in the US and China and has invested in over 225 businesses. HCP’s investments are oriented towards technology and business. They have supported companies like Lycos and VistaPrint for many years. A large part of their portfolio is now dedicated to AI and machine-learning, supporting initiatives such as Turbonomic, which automates work, and Nutonomy that has been the first self-driving vehicle company to deploy cars on both continents.
NEA, a global venture capital firm that invests in technology and healthcare since 1977, is a leading international venture capital firm. Since their inception, they have over 210 firms in their database, and made more than 360 acquisitions. They are focusing their expertise on cutting-edge AI projects that combine their fields of expertise. Syllable is an AI communication platform for medical professionals that allows them to communicate with patients. One Concern is an AI tool for hazard modeling and can be used to assist before, during and after natural disasters.
Kleiner Perkins, a California-based investment company, focuses mainly on digital startups. They have invested in hundreds of companies and are a part of many well-known initiatives such as Ring, Spotify, Slack Amazon, Google, Amazon, Slack, Google, and Amazon. As early-stage investors they often invest in businesses that use technology to advance life sciences. They most recently supported Viz.ai, an AI-driven healthcare company. Mist an AI-driven wireless LAN system. They also assist with Ripcord and Labelbox for data labeling, as well as Ripcord for automated document processing.
Horizon Ventures, a venture capital firm based in Hong Kong was established in 1999. Horizon Ventures has been a pioneer in technology-based investments and has supported many notable companies like Siri, Skype, and Facebook. Because they are focused on disruptive technologies with the potential to disrupt existing paradigms, they are well placed to help AI firms achieve their goals. They are internationally acclaimed despite their Asian roots. They currently work with Synthace (an AI biotech company based in the UK), Saildrone (an AI ocean data gathering company based the US), and Fano Labs (a natural language processing tool).
Mohr Davidow Ventures is a 30 year-old venture capital firm that focuses on technology and wants to transform global markets. MDV is a technology-focused investor who seeks out equipment that allows communication between the private, public and personal realms. MDV has invested in concepts in digital marketing, advertising, enterprise applications, education and health tech. They are now expanding their reach to AI businesses, which aim to be successful in these and related sectors.
Analytics Ventures focuses exclusively on AI-related projects. The AV is based in San Diego, California. It has an operational staff and a lab full AI experts. They also have a venture fund to support new ideas. AV is an investor and incubator. Currently, AV collaborates with a variety of AI businesses including Zerise, an AI operating platform for energy distribution across microgrids. CureMetrix offers medical imaging for mammograms and dynam.AI business optimization solutions.
True Ventures, a Silicon Valley-based venture capital firm, aims to support early stage businesses. True Ventures was founded in 2005 and has helped over 250 companies, including brands such as Blue Bottle Coffee and Ring. After receiving the National Venture Capital Association’s “Venture Firm of the year” award the previous years, they were well-positioned to invest in the future. They have been focusing on technology, and have access to some of the most innovative artificial intelligence (AI), projects, such as Loansnap which offers AI-driven home loans. Diligent Robotics develops AI to allow for robotic collaboration and Zymergen allows for biological manipulation.
Sierra Ventures is a global early-stage investment firm with a Bay Area presence. It focuses on Next Generation Enterprises and Emerging Technologies. Sierra Ventures investment network includes Global 1000 CXOs and operational leaders as well as deep topic specialists. It offers a platform for entrepreneurs from all corners of the globe.
Source Code Capital is a well-respected China VC firm that was founded in 2014. It invests in both growth-stage and early-stage companies. Source Code Capital supports a variety of industries, including media, entertainment, consumer services and finance. It also invests in transportation, education and healthcare. Source Code Capital has been a partner with nearly 150 of the most important Chinese technology innovators since its inception, including Meituan and Homelink.
NOW GO GET YOUR STARTUP FUNDED
To Get the Attention of Any Venture Capitalist, you will need to show traction or rapid adoption. While you get your traction going, you can fund your startup by bootstrapping and supplemented by investments from friends, family, and angel investors. You should then decide whether venture capital is right for you. You need to grow rapid growth and such growth may not be your style
If breakneck growth supported by VC money is what you seek, here are the steps:
Grab investors’ attention with a great elevator pitch and succinct presentation deck
Get the right introduction from your network to the VC
Build momentum by periodically emailing the VC with good news of progress
Set expectations that not all investors are right for your startup
Set a deadline for funding and make investors compete for your money by providing exciting progress reports and promote competition from investors for your company.