Venture capital firm Octopus Ventures has raised a £120 million fund to invest in UK technology startups, The Financial Times reports. The London-based investment company, part of UK fund management firm Octopus Group, has reportedly now raised a total of £660 million, fuelled in part by a string of successful UK startup exits. Natural language processing pioneer Evi Technologies, predictive keyboard startup SwiftKey, and AI video startup Magic Pony are all in the Octopus Ventures portfolio, as are companies like LoveFilm and property website Zoopla. "Evi Technologies in Cambridge was sold to Amazon and now powers Alexa, the voice-activated speaker," Alex Macpherson, chief executive of Octopus Ventures, told the FT. "We also backed Swiftkey which went to Microsoft last year [for $250 million; £200 million] and made a seed investment in Magic Pony, which went to Twitter [for $150m; £120 million].

Sherry Coutu spends much of her time above the Atlantic, shuttling between Cambridge and Silicon Valley in search of the brightest talent in the technology sector. When it comes to artificial intelligence -- one of the fields expected to make the biggest difference to the way we live our lives over the coming decades -- she believes that Britain has an edge. "There is a huge amount of evidence to show that we are No 1," said the Canadian-born tech guru, who has lived in Britain since 1993. But, she added, "we are still growing fewer companies than we should". Artificial intelligence (AI) is an overused term. Some big companies attempt to pass off basic systems that simply provide automated responses to consumers as an "AI solution".

Microsoft's recent purchase of LinkedIn for a reported 26.2 billion may be the biggest acquisition news so far in 2016. But Twitter is betting that its own recent acquisition of Magic Pony Technology – a neural networks/machine learning company – for a mere 150 million will pay big dividends down the stretch. Commenting on the acquisition in a recent Twitter blog, Twitter CEO and co-founder Jack Dorsey said, "Machine learning is increasingly at the core of everything we build at Twitter." Dorsey went on to say that, "Magic Pony's machine learning technology will help us build strength into our deep learning teams with world-class talent, so Twitter can continue to be the best place to see what's happening and why it matters, first. We value deep learning research to help make our world better, and we will keep doing our part to share our work and learnings with the community." Magic Pony Technology is the third machine-learning startup that Twitter has acquired since Madbits in 2014, which begs the question: Why is Twitter so heavily focused on machine learning?

Twitter users may soon notice a great improvement in the visual content of their apps, if their latest acquisition is any indicator. Twitter recently acquired a new-ish startup based in London specializing in artificial intelligence (AI). The company, Magic Pony, uses machine learning to build improved systems for visual processing. More specifically, according to Twitter's blog post, Magic Pony's technology is, "based on research by the team to create algorithms that can understand the features of imagery and will be used to enhance Twitter's strength in live and video." Twitter plans to add this technology to other recent acquisitions including Madbits and Whetlab.

The race to acquire artificial intelligence talent has inverted the "laws" of M&A, with pre-revenue AI firms such as UK-based Magic Pony being sold to Twitter for about 10m per employee. Magister Advisors, the global M&A advisory firm to the technology industry, notes that AI firms without revenues are more valuable than those with, as buyers look for pristine competitive advantage, and that Britain is amongst top tier for AI innovation. Twitter just paid 150m for 14-person Magic Pony, a UK-based AI visual search company barely anyone had heard of before the deal. At 10m per employee it marks a high water mark in AI for what is essentially a team acquisition. Magister has tracked 26 AI driven deals since 2014 in the US, Europe and Israel, 11 of which involved companies with less than 50 employees which were acquired largely, or entirely, for the team and capability. Across all 11 deals, the median price paid per employee has reached 2.4m, meaning a high quality AI company with 40 employees would be valued at near 100m - even if it had little or no revenue.

As Devin Coldeway of Tech Crunch puts it, "Just as you could supply the probable details of a pixelated face because you are familiar with how faces look, the AI can extrapolate as well, having examined on a pixel by pixel basis what certain features look like at various levels of detail."

Two weeks after Twitter acquired Magic Pony to advance its machine learning smarts for improving users' experience of photos and videos on its platform, Google is following suit. Today, the maker of Android and search giant announced that it has acquired Moodstocks, a startup based out of Paris that develops machine-learning based image recognition technology for smartphones whose APIs for developers have been described as "Shazam for images." Moodstocks' API and SDK will be discontinued "soon", according to an announcement on the company's homepage. "Our focus will be to build great image recognition tools within Google, but rest assured that current paying Moodstocks customers will be able to use it until the end of their subscription," the company noted. Terms of the deal were not disclosed and it's not clear how much Moodstocks had raised: CrunchBase doesn't note any VC money, although when we first wrote about the company back in 2010 we noted that it had raised 500,000 in seed funding from European investors.

Twitter has made no secret of its interest in machine learning in recent years, and on Monday the company put its money where its mouth is once again by purchasing London startup Magic Pony Technology, which has focused on visual processing. "Magic Pony's technology -- based on research by the team to create algorithms that can understand the features of imagery -- will be used to enhance our strength in live [streaming] and video and opens up a whole lot of exciting creative possibilities for Twitter," Twitter cofounder and CEO Jack Dorsey wrote in a blog post announcing the news. The startup's team includes 11 Ph.Ds with expertise across computer vision, machine learning, high-performance computing, and computational neuroscience, Dorsey said. They'll join Twitter's Cortex group, made up of engineers, data scientists, and machine-learning researchers. The acquisition follows several related purchases by the social media giant, including Madbits in 2014 and Whetlab last year.

Twitter has bought London-based AI startup Magic Pony Technology for a reported 150m ( 102m) as the company moves to strengthen its position in image-sharing, video and live video. Founded in 2014, Magic Pony uses machine learning to build improved systems for visual processing. The company said it was excited to be joining forces with Twitter "to improve the visual experiences that are delivered across their apps". Twitter's chief executive, Jack Dorsey, said Magic Pony's technology would be used to enhance live and video offerings and "opens up a whole lot of exciting creative possibilities for Twitter". Dorsey said the team included "11 PhDs with expertise across computer vision, machine learning, high-performance computing and computational neuroscience".

Twitter is investing in machine learning with the 150 million acquisition of Magic Pony Technology, a London-based firm that developed machine learning techniques for visual processing. Calling machine learning "the core of everything we build at Twitter," CEO Jack Dorsey blogged that the buy builds on other investments his company has made: an acquisition of Madbits in July 2014 and Whetlab in June 2015. Machine learning makes it easier for Twitter users to create, share and discover "so that every time you open Twitter you're immersed in the most relevant news, stories, and events for you," he said. Magic Pony's team will join Twitter Cortex, a team of engineers, data scientists and machine learning researchers "dedicated to building a product in which people can easily find new experiences to share and participate in." Twitter has 310 monthly active users and 3,800 employees.