Why companies like Twitter are paying top dollar for AI startups

Big tech firms acquiring artificial intelligence startups are paying top dollar for them and are increasingly looking for those yet to bring in revenue, bucking the trend of wider tech M&A. "A good AI engineer is worth more than many company chief executives right now," said Victor Basta of advisory firm Magister Advisors which identified the pursuit of talent in AI as one of the most significant drivers of acquisitions in the sector, leading to significantly large sums being spent on relatively small and early stage startups. The analysis found that the average acquisition was valued at 2.4m ( 1.8m) per employee for AI startups based on 26 deals in Europe, the US and Israel since 2014. Twitter's surprise 150m deal for Magic Pony last month had a significantly higher value of 10m per employee. It also noted that there were more companies chasing each startup as the sector attracts a greater range of businesses which would traditionally not have competed with each other in the race to build their AI capabilities.