How Corporate Giants Invest In AI

Last week I published an article on the overall trends in the AI industry. After reviewing 1600+ AI startups globally, I was able to group most startups into 22 different subcategories, reveal fundraising trends, identify countries leading the AI race and more. Check it out here.

Taking it one step further, I wanted to share how the largest corporations by industry invest in AI startups. Watching corporate venture capital fund's 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 with future competition.

I analysed over 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 (The largest semi-conductor, chip and electronic device manufacturers)
• Media (Largest media, advertising or entertainment corporations)
• Industrial (Largest industrial manufacturing corporations that includes construction, appliances, metals, aerospace, chemicals, etc)
• Commerce (Worlds largest eCommerce and retail stores)
• Insurance (Largest life, health, automobile or reinsurance providers)
• Consulting (The largest strategy, tech and accounting consulting firms)
• Automotive (The largest automotive or parts manufacturers)
• Healthcare (The 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. VC's typically have a much longer term vision than corporations and should indicate what AI startups will have more of an impact in 5 to 10 years.

Please note, all of this information is what I was able to find publicly. I'm sure there are many undisclosed investments made by these corporations. However, I think 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/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's surprising to find Finance, Telecom and Media industries are leading outside of the tech industry. Surprisingly, the Healthcare industry invested in the least amount of AI startups.

Most industry giants are investing in more US AI startups than INT startups. This means corporations abroad are pushing more capital to the US and less US investors are moving capital outside of the US. In reference to my previous article, 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. The majority of all industry leaders are investing in slightly more Horizontal AI categories than the Vertical AI categories. This is probably driven by corporations desire to find tools that improve existing products and services as opposed to trying to create a whole new product offering.

AI startups that fundraise from corporations are raising significantly more capital than the global benchmark of $10-11M. Startups receiving 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 fundraise by location in to categories it will paint a slightly different picture. It seems US corporate investors either find more opportunities/impactful AI startups in the Vertical category or less supply of them in comparison to the Horizontal category. For the international community it is opposite that of the US.

There doesn't seem to be any outliers by country that pushed the average capital raise, which is something we saw in the previous article. The countries that receive the most investment from each industry and Top VCs are the United Kingdom, 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 most amount of startups/funding outside the US.

AI Subcategory Investment Analytics By Industry

The graph above showcases how corporations from each industry are investing across the 9 Horizontal AI subcategories. In my previous article, most capital flowed into Vision, Tool and Analytics subcategories, this follows the corporate industry trends as well. To help you parse through the graph above, I broke down the top subcategories per industry:

• Tech Giants: Vision, Tool and Analytics
• Top VCs: Vision, Analytics and Security/Assistants
• Finance: Tool, Security and Vision
• Telecom: Vision, Analytics, Security and Assistants
• Electronic: Tool, Security and Infrastructure
• Media: Vision, Analytics and Data
• Industrial: Vision and Tool/Analytics/Infrastructure/Robotics
• Commerce: Vision and Infrastructure
• Insurance: Tool and Analytics
• Consulting: Security
• Automotive: Robotics
• Healthcare: Vision

This graph represents how corporations across all industries have invested in the 13 Vertical AI subcategories. In my previous article, Automotive, Healthcare and Fintech subcategories received the most funding. The graph above showcases how Fintech, Enterprise, 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 IoT. In addition, Top VCs invest significantly more in Healthcare than they do in the Automotive subcategory. The top subcategories per industry are as follows:

• Tech Giants: CRM, Marketing and IoT
• Top VCs: Enterprise, Healthcare and Fintech
• Finance: Fintech
• Telecom: 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, A16Z and Khosla/Accel. The most popular AI startups are Kensho and Timeful.
• Finance: Most active investors are Bloomberg, Mastercard and Goldman/Fidelity/Citi. The most popular AI startups are Kensho, Moneytree and H2O.ai/Appzen/Versive.
• Telecom: 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: There weren't any investors that stood out as the most active.

The startups with funding from the most amount 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.

Conclusion

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.

I will continue to post a few more articles on the state of the AI industry. This will include top startups by subcategory. Stay tuned!

Kyle