A Deep Dive in the Venture Landscape ofArtificial Intelligence and Machine Learning
September 2015
Ajit NazreRahul Garg
Artificial Intelligence Evolution
Artificial Intelligence is on its 3rd reincarnation since its first birth in 1950 and looks like it has longevity this time around
1950 -1970s – Start of AI as a concept but no real applications
1980 -2000 – AI/ML mainly used in Military & Academia
2005 onwards – Large tech companies such as IBM, Microsoft, Google, and Facebook have invested in AI/ML for commercial applications
1956
John McCarthy organized a
conference at Dartmouth &
named the field as Artificial Intelligence
1950
Alan Turing published a paper
about the possibility of machines with true intelligence
1995
US Department of Defense uses
predator UAV in Balkan War
1997
IBM’s Deep Blue wins chess against World Champion
Gary Kasparov
2011
Debut of Virtual personal assistants like Apple’s SIRI &
Microsoft’s Cortana
2011
IBM Watson computer defeats
Jeopardy game show champions
Jan 2014
DeepMind team uses deep learning
algorithms to create a program that wins
Atari games
Oct 2013
Vicarious breaks any ‘Captcha’ passing
the Turing test
Jun 2015
Facebook launches Moments that
detects faces and shares photos with
friends to whom they belong
May 2015
Google self driving cars complete 1M
miles autonomously
Jun 2015
DeepMind teaches program how to
read
Artificial Intelligence / Machine Learning Classification
Artificial Intelligence
Deduction, Reasoning,
Problem Solving
Knowledge Representation
Planning Perception: Computer Vision
Machine Learning
Robotics: Motion and
Manipulation
Natural Language Processing
Social Intelligence
Supervised Learning Unsupervised Learning
Reinforcement Learning
Decision Tree
Learning
Association Rule
Learning
Neural Networks
Inductive Logic
Programming
Support Vector
Machines
Bayesian Networks
Similarity and Metric
Learning
Clustering
Deep Learning
Manifold Learning
Sparse Dictionary Learning
Genetic Algorithms
Multiple Factors contributing to Dramatic Improvement in Prediction Accuracy
Increasing Prediction Accuracy of Algorithms
=Improved Decision
Making
Increase in affordable Compute
Power
Big Data
Faster networks
Cloud Infra-structure
Sensor Networks
Advances in Neuroscience
“Whenever we can replace human judgment by a formula, we should at least consider it.” -Daniel Kahneman (2002 Nobel Prize in Economics)
Applications of AI/ML in Daily Use Already
InfoSearch engines
Sentiment analysis (or opinion mining)
Information Retrieval
Spam filtering for email
Speech and handwriting recognition
Spoken language understanding
Stock analysis
Structural health monitoring
Syntactic pattern recognition
Topic spotting: categorize news articles
Weather prediction
ToolsFace Detection
Finance – Derivatives Trading
Game playing
Software Testing
Internet fraud detection
Machine translation
Medical diagnosis
Mood analysis
Brain machine interface in prosthetics
Optical character recognition
Recommendation systems
Robot locomotion
Services
Advertising - Targeting
Bioinformatics
Automatic word completion
Chemical Informatics
Classifying DNA Sequences
Computer Vision – Object Recognition
Customer Segmentation
Detecting Credit Card Fraud
R&D Activity in AI / ML as measured by Patents granted
Source: MarketRealist.com
IBM and Microsoft had more patents in AI / ML granted in 2014 than all others
M&A Activity in AI / ML is Heating up
GoogleDark Blue Labs, Vision Factory, Jetpac, Quest Visual, Titan Aerospace, Deepmind Technologies, Boston Dynamics, Bot & Dolly, Holomni, Redwood Robotics, Industrial perception, Schaft, Flutter, Wavii, Behavio, DNNresearch, Viewdle, Pittpatt, Saynow, Phonetic Arts, Metaweb
Google Facebook Yahoo Apple IBM0
5
10
15
20
25
21
10
6 64
FacebookPebbles, Surreal Vision, Ascenta, QuickFire, Wit.ai, Oculus VR, SportStream, Jibbigo, Face.com, RecRec
YahooTomfoolery, Cloud Party, Skyphrase, LookFlow, IQ Engines, Qwiki
AppleMetaio, Cue, Novauris Technologies, Polar Rose, Siri, FingerWorks
IBMAlchemyAPI, Silverpop Systems, Curam Software, Languagae Analysis Systems
No. of companies acquired in AI/ML
Source: Wikipedia
Google is most acquisitive (21 companies) in the space followed by Facebook (10 companies)
AI / ML Venture Funding Analysis: Methodology
• Created a database of over 2800 AI/ML companies from several sources including Angel list, Crunch base, Tracxn, Venture scanner, Portfolios of major VCs, News Reports & Secondary Research
• Weeded out public, acquired, closed down and non existent companies (with no website) arriving at a list of 1781 companies
• Filtered the list further to 312 companies based on funding > $100k
• In addition to the focus areas in AI / ML areas defined on slide 3, we have extended our analysis to areas like augmented reality, image / facial recognition, and drones that overlap multiple areas.
2800
AI & ML companies from sources: Angel List, Crunch base, Tracxn, Venture scanner, VC websites, News
articles & secondary research
1781
Active companies after weeding out public, acquired, closed down, non
existent companies
312
Companies that have external
funding of >$100k
Active AI / ML Ventures by Country in 2015
More than half of the AI/ML companies are based in the US
USA UK India Canada Germany France Israel Russia China Nether-lands
Others0
100
200
300
400
500
600
700
800
900
1000929
127 10877 52 44 34 32 29 19
330
n= 1781
AI / ML Ventures based on Funding and Location
SF Bay Area has the highest density of funded startups followed by New York & London
Out of funded companies , nearly 40% are in the SF Bay Area & 70% in North America
Nearly 18% of companies are funded
Silicon Valley
San Francisco
NewYork London Seattle Berlin0
10
20
30
40
50
60
70
80
68
49
26
12 128
312
1469
Funded Com-paniesOthers
n=312
AI / ML Startups are still in their Infancy
62% of the startups still pre series A
Seed/Angel Series A Series B Series C Series D Series E Other0
50
100
150
200
250
193
72
26
10 5 1 5
n=312
Venture Funding and Most Active VCs in AI / ML
Khosla Ventures: Blue River, Scaled Inference, Atomwise, Lumiata, Kaggle, Idibon, Metamind, Pymetrics, Ayasdi, Catalia Health, Theatro, Thync
Google Ventures: Expect Labs, Wonder Workshop, Clarifai, Orbital Insights, Airware, Agent, AltspaceVR, Bento, Building Robotics, Framed, Skycatch
Intel Capital: API.ai, Cloudmade, Emotient, Expect Labs, Eyesmart, PrecisionHawk, Hooklogic, Prelert, Reflektion, Total Immersion, Fortscale,Whoknows, Incoming Media, Occipital
Two Sigma Ventures: Anki, 3D Robotics, Rethink Robotics, Jibo, Kasisto, Dextro, Socure, Floored, Canary, Zymergen, Indico Data,
RRE Ventures: DigitalGenius, Yhat, Clearpath Robotics, Jibo, Palantir, Giphy, Viglink, Airware
2010 2011 2012 2013 20140
50100150200250300350
Intel Capital Khosla Ventures
Two Sigma Ventures
Google Ventures
RRE Ventures
0
2
4
6
8
10
12
14
1614
12 12 12
8
Source: Company Websites
Source: CB Insights
No. of Investments in AI/ML companies
Venture Investments in $M in AI/ML companies
300% increase in venture funding from ‘13 to ‘14. Intel Capital, Google, Two sigma & Khosla ventures most active in investing in AI / ML
Funded Ventures in various fields of AI / ML
Machine learning, Robotics, AR and Image recognition are most actively funded areas
n=312
ML (exclud-ing Deep learning and pre-
dictive ana-lytics)
Robotics & Drones
AI (exclud-ing NLP,
ML, Robot -ics, Com-puter Vi-
sion)
Aug-mented Reality
Image & Face
Recog-nition
NLP Predictive Analytics
(clustering, SVM,
Bayesian networks)
Computer Vision
Deep Learning &
Neural Networks
Others0
10
20
30
40
50
60
70
80
90
10092
58
36 34 3326
11 10 84
Major Fields for AI / ML Venture Investment by Geography
North America is leading the way but Europe has significant presence in AI & AR areas
n=312
0
10
20
30
40
50
60
70
80
68
44
22 20 20 19
116 6
2
1710 9
14
613
0 2 2 27 4 2 2 2 0 2 0
North America
Europe
Asia/Other
Areas of Application of Venture funded companies in AI/ML
72% of the funded startups targeting enterprise applications
n=312
(consumer apps, consumer electronics, educational applications for consumers
& toys)
Enterprise Consumer0
50
100
150
200
250
224
88
AI / ML Ventures with Applications across Industries
Impact across a wide range of industries
Consumer Apps
Industrial Automation
AI/ML as a Service
Healthcare
Media
Marketing
Advertising
Security
Financial Services
Ecomm
erce
HR Agriculture
Education
Enterprise productivity
IT Services
Customer Service
Others
0
10
20
30
40
50
60
50
38
30
23 23 23
16 14 149 8 7 6 6 5 5
35
n=312
Aerospace
Cumbersome & manual process of maintenance and repair using
field manuals that have to be frequently updated
Field service agents can call or chat with support from his/her augmented reality view
Today Future
Companies making it happen: Atheer Labs, Augmate, Infinity AR, Total Immersion, Vuzix
Pic Courtesy: Atheer Labs
Agriculture
Farming decisions based on tradition and intuition
Machine learning algorithms using sensor data and aerial imaging help farmers make
intelligent data based decisions increasing yield
Today Future
Companies making it happen: Blue River, Farmlogs, Greensight, Mavrx, Pulsepod, Terravion
Pic Courtesy: Farmlogs
Automotive
Cars driven by humans, prone to errors (nearly 1.3M people die in road accidents
every year)
Driverless cars – leading to comfortable experience & less human fatalities
Today Future
Companies making it happen: BMW, Daimler Benz, Google
Pic Courtesy: Google
Background Checks
Checking of background information, documents and identity manually taking 1-2
weeks
Automated background checking process through APIs, real time ID authentication using
image recognition. Nearly 60% reduction in costs
Today Future
Companies making it happen: Onfido
Pic Courtesy: Onfido
Communications
People can talk to one another only in a common language that they speak
People will be able to talk to one another without knowing the other person’s language
– Nothing lost in translation
Today Future
Companies making it happen: Lexifone
Pic Courtesy: Clker.com
Hi, How are you
I’m fine thank you
Hi, How are you
मैं ठीक हूं धन्यवाद
Customer Care
Time consuming process of Authentication
Biometric Voice recognition based instant authentication
Today Future
Companies making it happen: Agnitio, Nuance, Verbio, Voicebase, Voiceitt, VoiceVault
Sir, Please help me with the authentication & tell me your DOB, Address,
Mobile No.My Password is XXXXX
Customer Care
Cumbersome & time wasting Voice Menu
Virtual assistant that can converse like humans & assist without Menus
Today Future
Companies making it happen: DigitalGenius, Expect Labs, Nuance
Press 1 for Credit Cards, Press 2 for
Debit Cards, Press 3 for Loans, Press 4 for
Netbanking……
Healthcare
Doctor reads static patient charts before or after visiting a patient
Doctor can read all relevant reports dynamically using gestures during her patient
visit
Today Future
Companies making it happen: Atheer Labs, Augmedix, Infinity AR
Media
Watching ads on TV is avoided as they are not actionable and mostly irrelevant
Automatic content recognition will allow advertisers/ programmers to inject
interactivity & context relevant content
Today Future
Companies making it happen: Cognitive Networks, Datascription, Dextro, Enswers, Magic Pony Technology, Persado, Videntifier Technologies
Wonder if that Jersey came in my
size
Just ordered the Jersey
directly
Pic Courtesy: Forbes
Navigation
Driver needs to divert his gaze or has to give rigid voice instructions
On windshield navigation with heads up display that recognizes the surrounding and
gives instructions
Today Future
Companies making it happen: Nuviz, Wayray
Pic Courtesy: Wayray
Office Productivity
Mundane tasks in office leading to decreased productivity
Automatic meeting schedulers, note takers, speech to text transcription & virtual personal
assistants will improve productivity
Today Future
Companies making it happen: Assistant.to, Gridspace, Idibon, Robin Labs, Thoughtly, X.ai, Zahdoo
Pic Courtesy: Typepad & Coolcontourproducts.com
Oil and Gas
Crack Detection: It takes human 5 hours per inspection with 92%
accuracy (Avg cost ~ $7.5)
20 seconds with 94% accuracy through image recognition (Average Cost ~ $2)
Today Future
Companies making it happen: Tractable
Pic Courtesy: Wikipedia
Recruiting
Impossible to manage candidates with required behavioral skills
Neuroscience based games will match candidates with required skills
Today Future
Companies making it happen: Connectifier, Pymetrics, Talentoday
Pic Courtesy: Pymetrics
Wealth Management
Stock trading & investing happens mainly on personal skills and divine luck
Sentiment analysis, crowd sourced research & algorithms will make investing more
transparent and better informed
Today Future
Companies making it happen: Betterment, Estimize, Narrative Science, Personal Capital, Sigfig, Wealthfront