Global 2021 AI Venture Capital Investment Nears 2019 Historical High at US$22.3 Billion

"It's no surprise that startups led the funding in 2021," Su says. These include UiPath and WorkFusion in enterprise automation, 4Paradigm, Databricks, Dataiku, DataRobot, and H2O.ai in data science and AI development platforms, and AI chipset vendors like SambaNova Systems, Groq, ECARX, Horizon Robotics, Enflame, and Hailo. "In essence, businesses need to identify their AI strategies, whether to buy, build, or both. Businesses looking to buy their AI solutions will look to UiPath and WorkFusion; those looking to build their own custom AI will lean toward the data science and AI development platforms. In some cases, having the right AI solution is not enough. Businesses are also looking for the most optimal AI hardware, and this is where AI chipset startups come into play," explains Su.

While the strong rebound indicated bullish market sentiment on the prospect of AI as a disruptive technology, the rebound is even more impressive considering the VC market exit of well-known startups taken into account. In 2021, no less than eight significant startups exited the VC market, including Affirm, Babylon, Darktrace, Exscientia, Recursion, SenseTime, SentinelOne, and UiPath. These startups have a strong value proposition, clear core competencies, and sustainable business models. With the exit of these startups, however, the total VC funding for AI in future years may see lower, or even negative, growth.

"These startups have demonstrated the full potential of AI to businesses. They also serve as examples for the younger AI startups. While the AI market is getting more crowded, it is still essential for aspiring startups to hone their value proposition, identify the right niche, develop core competency, and well serve customers," concludes Su.

These findings are from ABI Research's Artificial Intelligence Investment Monitor 2021 application analysis report. This report is part of the company's Artificial Intelligence and Machine Learning research service, which includes research, data, and analyst insights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis on key market trends and factors for a specific technology.

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