The pandemic and resulting economic toll has presented challenging headwinds for startups. In this post we look back on Q2 ending funding trends for AI startups to determine the trajectory of innovation in this emerging technology sector. Below we see that the number of funding events per quarter has been on a downward trend, with 122 deals closing in Q2. This implies that new innovations in the AI sector are slowing down as measured by the volume of disruptive companies attracting investments. In addition, below we can see that the average funding per deal has also been on a slight downward trend with an average deal size of $29M in Q2.

This blog post provides an excerpt from our Quarterly Review for Artificial Intelligence (AI) and focuses on the quarterly funding trend. The below chart summarizes AI year-to-date funding compared to last year. As you can see, Q1 2020 funding closed at $3.1B, which is a 44% drop from Q1 2019. A quarter of the way through 2020, and we are at 13% of the 2019 full-year funding amount. Venture Scanner provides a range of emerging technology research services.

Artificial Intelligence (AI) has become one of the hottest sectors in recent years, with its technology promising to revolutionize and automate every industry imaginable. We have been covering this trend, showing a massive increase in AI startup funding. As you can see in the graphic below, AI funding more than doubled from 2016 to 2017. Its funding more than tripled from 2016 to 2018. This phenomenon then begs the question – what caused this explosive growth in AI funding?

For this quarter's funding analysis, let's examine how average funding event sizes in the artificial intelligence (AI) sector are evolving. The graphic below shows the AI average funding event size over time by quarter. As the graphic demonstrates, AI average funding event size in Q1 2019 was at $35M. This is an increase of 75% from the $20M in Q1 2018. The average funding size has been on a robust upward trend, with the average funding size last quarter around 3 times larger than it was 5 years ago.

How has the exit activity for artificial intelligence developed in the first half of 2019? This blog post explores AI exit metrics through Q2 2019 and compares them to previous years. The graph below shows the number of AI exits by year, stacked by quarters. As the graphic demonstrates, AI has seen a total of 38 exit events through Q2 of this year. This represents 60% of the total exits in 2018, and 119% of the exits through Q2 in 2018.

Here is our Q2 2019 summary report on the artificial intelligence startup sector. The following report includes a sector overview and recent activity. To learn more about our complete artificial intelligence dynamic report, visit us at www.venturescanner.com

Given the popularity of our Sector Maps, today we are introducing our Active Investors Map, which shows the most active investors in an emerging technology sector and a sampling of companies that they have invested in. Below you can see our Active Investors Map for the Artificial Intelligence sector. As the above graphic indicates, Y Combinator is the most active investor in the AI sector with 91 investments, followed by Accel with 81 investments and New Enterprise Associates with 73 investments. Rounding out the list is Intel Capital, the most active of corporate investors in the AI sector. To learn more about our complete artificial intelligence web-based report, visit us at www.venturescanner.com

How is the funding environment shaping up for artificial intelligence in 2019? As we pass the mid-year mark, let's see how the year-to-date metrics compare to the historical trends. The graph below shows AI total funding by year, stacked by quarters. As the graphic demonstrates, AI has amassed $11B through Q1 and Q2 of this year. This amount represents 56% of the total funding in 2018, and 138% of the funding through Q2 in 2018.

Want to learn more about our artificial intelligence dynamic report?

Want to learn more about our artificial intelligence dynamic report?