I recently published an article on the overall trends in the artificial intelligence (AI) industry. After reviewing more than 1,600 AI startups globally, I was able to group most into 22 subcategories, reveal fundraising trends, identify countries leading the AI race and more.
Taking it one step further, I wanted to share how the largest corporations by industry invest in AI startups. Watching corporate venturing activity is a key indicator in spotting industry disruption. Corporate funds typically have very rigorous investment criteria and chase after investments that either add new revenue streams, boost operational efficiencies or attempt to partner future competition.
I analysed more than 200 of the most active CVC funds as well as the most influential corporations across 11 industries. My goal was to find which AI subcategories receive the most funding by industry, what corporations lead in AI investment per industry, what are the most popular AI startups in each industry and what AI startups are making the most impact across all industries.
The 11 industries I researched are as follows:
- Tech giants – top 15 largest or most influential technology corporations.
- Finance – largest most active banks or financial institutions globally.
- Telecoms – largest telecoms by continent.
- Electronic manufacturers – largest semiconductor, chip and electronic device manufacturers.
- Media – largest media, advertising or entertainment corporations.
- Industrial – largest industrial manufacturing corporations that includes construction, appliances, metals, aerospace, chemicals and so on.
- Commerce – worlds largest e-commerce and retail stores.
- Insurance – largest life, health, automobile or reinsurance providers.
- Consulting – largest strategy, tech and accounting consulting firms.
- Automotive – largest automotive or parts manufacturers.
- Healthcare – largest hospitals, biochemical or pharmaceutical corporations.
I also took TechCrunch’s 2017 top 10 VC list and used it as a reference point to compare against corporations. VCs typically have a much longer-term vision than corporations and should indicate which AI startups will have more of an impact in five to 10 years.
All of this information is what I was able to find publicly. I am sure there are many undisclosed investments made by these corporations. However, this subset of information will give you a general idea of the common trends among industries.
AI investment analytics by industry
There was over 400 investments and acquisitions made by large corporations in AI startups. The top VC’s and tech giants outpace all other industries with the most investments in AI startups. However, it is surprising to find the finance, telecoms and media industries are leading outside the tech industry. Surprisingly, the healthcare industry invested in the smallest number of AI startups.
Most industry giants are investing in more US AI startups than international (INT) startups. This means corporations abroad are pushing more capital to the US and fewer US investors are moving capital outside the US. Given that there are significantly more AI startups built in the US, this is probably why we have this disparity. It is surprising however, to see the top VCs actually invest less abroad than most tech giants.
In my previous article I split all AI startups into two categories. First by horizontal, which are startups building AI tools – think of this as the hammer or measuring tape. Second by vertical, which are startups creating a service using a form of AI – think of this as the plumber or construction worker. Most industry leaders are investing in slightly more horizontal AI categories than the vertical AI categories. This is probably driven by corporate desire to find tools that improve existing products and services as opposed to trying to create a whole new product offering.
AI startups that raise funds from corporations are raising significantly more capital than the global benchmark of $10m-$11m. That startups receive capital from corporations signals to the industry that there are potential synergies, therefore future growth expectations are much higher and price goes up. International AI startups raise a significant amount more capital than US AI startups. This can be a result of a tremendous amount of capital abroad with a very little supply of AI startups, which inevitably drives up prices.
If you were to break apart the average fundraising by location into categories, it will paint a slightly different picture. It seems US corporate investors either find more opportunities or impactful AI startups in the vertical category or fewer compared with the horizontal category. For the international community it is the opposite to the case in the US.
There do not seem to be any outliers by country that pushed the average capital raise. The countries that receive the most investment from each industry and top VCs are the UK, China, Israel, Canada, Japan and Singapore. These countries lead because they have very active corporations investing in their community and they also lead with the largest number of startups and funding outside the US.
AI subcategory investment analytics by industry
The graph below showcases how corporations from each industry are investing across the nine horizontal AI subcategories. To help you parse through the graph, I broke down the top subcategories per industry:
- Tech giants – vision, tool and analytics.
- Top VCs – vision, analytics, security and assistants.
- Finance – tool, security and vision.
- Telecoms – vision, analytics, security and assistants.
- Electronic – tool, security and infrastructure.
- Media – vision, analytics and data.
- Industrial – vision, tool, analytics, infrastructure and robotics.
- Commerce – vision and infrastructure.
- Insurance – tool and analytics.
- Consulting – security.
- Automotive – robotics.
- Healthcare – vision.
The graph below represents how corporations across all industries have invested in 13 vertical AI subcategories. The graph shows how fintech, enterprise, customer relationship management (CRM) and marketing are the most popular subcategories among all industries and top VCs. This means corporations are focused on investing in operational efficiencies and customer acquisition. However, if you were to remove top VCs, the most popular subcategory is automotive, followed by marketing, CRM, fintech, enterprise and the internet of things (IoT). In addition, Top VCs invest significantly more in healthcare than they do in automotive. The top subcategories per industry are as follows:
- Tech giants – CRM, marketing and IoT.
- Top VCs – enterprise, healthcare and fintech.
- Finance – fintech.
- Telecoms – enterprise and automotive.
- Electronic – automotive.
- Media – marketing.
- Industrial – IoT.
- Commerce – commerce.
- Insurance – fintech.
- Consulting – CRM.
- Automotive – automotive.
- Healthcare – enterprise and healthcare.
Top AI investors and startups by industry
To recap some of the information above, I wanted to share who are the most active AI investors in each industry, the most popular AI startups in some industries, and the most popular AI startups overall. The top investors and startups are below:
- Tech giants – most active investors are Intel, Google and Salesforce. The most popular AI startups are MindMeld, CognitiveScale and Unbabel.
- Top VCs – most active investors are NEA, Andreessen Horowitz, Khosla and Accel. The most popular AI startups are Kensho and Timeful.
- Finance – most active investors are Bloomberg, Mastercard, Goldman, Fidelity and Citi. The most popular AI startups are Kensho, Moneytree, H2O.ai, Appzen and Versive.
- Telecoms – most active investors are SoftBank, NTT and Singtel. The most popular AI startups are Precision Hawk and MindMeld.
- Electronic – most active investors are Dell and Nvidia.
- Media – most active investors are R/GA, Comcast and KBS. The most popular AI startups are Vidrovr and Indicative.
- Industrial – most active investors are GE, ABB and Bosch. The most popular AI startup is Maana.
- Commerce – most active investor is Alibaba. The most popular AI startup is SalesPredict.
- Insurance – most active investor is New York Life.
- Consulting – most active investor is Bain.
- Automotive – most active investors are Ford and Toyota.
- Healthcare – no investor stood out as the most active.
The startups with funding from the largest number of industries are Cyngn, Lemonade, Graphcore, Vicarious, Abeja, Tamr and MindMeld.
The startups with the most corporate investors are Kensho, Cyngn, MindMeld, Moneytree, Maana, Lemonade, H2O.ai and Bonsai.
I hope this gives you a better overview of the AI startup ecosystem. As a reminder, this only showcases public information corporations are willing to share about their investments in AI. However, I think it is a good indicator where AI is growing, where it is not, and where it could be in the future.
This is an edited version of an article first published in Linkedin