Startups with Artificial Intelligence Face Market Reality

Startups with Artificial Intelligence Face Market Reality

PitchBook, a market research firm, reveals in its latest report on artificial intelligence and machine learning a sharp decline in investments in artificial intelligence startups during the first half of 2022.

The report indicates which categories continue to attract the interest of global venture capital investors and which are waning.

Funding for artificial intelligence startups fell by 21 per cent in the first two quarters of 2022 compared to the same period last year—outpacing the decline in the information technology sector as a whole. On the other hand, total funding for 2022 (USD 48.2 billion in the first half) is on track to surpass the total amount from 2020 (USD 65.3 billion).

More than half of the venture investments in artificial intelligence in the second quarter—USD 11 billion out of a total of USD 20.2 billion—went into applications such as drug discovery, security, sales, and marketing.

The hardest hit were startups specialising in cloud artificial intelligence. Funding for this category is expected to drop by 87.7 per cent in 2022 compared to 2021.

Looking ahead: Despite the grim figures, the authors refuse to characterise the current period as another AI winter. They anticipate that investments will grow over time from approximately USD 175 billion in 2022 to over USD 350 billion by 2025, primarily due to advancements in multimodal artificial intelligence, universal models, and synthetic data.

AI and ML Report: https://pitchbook.com/news/reports/q2-2022-artificial-intelligence-machine-learning-report?utm_campaign=The%20Batch&utm_medium=email&_hsmi=228530653&_hsenc=p2ANqtz-9qyWDXwQwhTVM4J8AnBjFd-COPblJAq2rgdHHQyTRRDwN0cfIvHYtAJ1EkA0kywAaYMb6F8Y0C5VBiGHcI2laKjx-Mnw&utm_content=228529359&utm_source=hs_email