Last week and together with robot developer Emotech, we hosted our 3rd MeetAI event which saw more than 200 AI enthusiasts, tech experts and entrepreneurs gather to network and listen to robotic artist Patrick Tresset and MLP expert Indeera Munasinghe sharing the latest insights into their respective AI practices and the many fields AI penetrates.
Given the continually rising interest in AI (AI being essentially a way of teaching software to learn ‘human ways of thinking’) particularly in the tech hub London, it therefore seemed appropriate to round up this week with a look into recent AI developments and this week’s investment activity in this sector.
AI is undoubtedly a field whose success investment professionals across the globe are banking highly on. According to research firm Tractica, AI software revenue is predicted to reach $59.8 billion dollar worldwide by 2025.
However, AI will not be limited solely to consumer markets but instead permeate the healthcare sector, manufacturing industry (e.g. self-driving cars in the automotive sector), agriculture, finance (e.g. robotic investment advisors), the media and entertainment industry, advertising, aerospace, and legal and governmental services through applications such as highly intelligent image recognition, data management, algorithmic securities trading etc.
VCs all over the world are pouring money into this coveted technological sub-sector, which might not replace human labour in the immediate future, but will certainly improve workflow by executing mundane tasks for us. And investors might soon see the fruits of their investment face-to-face, which companies currently developing smarter robo-advisors to minimise risk and improve returns in investment management services!
The UK view:
Since the first AI businesses have emerged, global corporates such as IBM, Google, Yahoo, Intel, Apple and Saleforce have been competing for private AI companies. The UK in particular has seen a great interest in its AI startups in the past 12 months. One of Europe’s largest investment firms, Octopus Ventures, started investing in UK AI startups already in 2008 and has continued to select highly promising UK startups, such as SwiftKey, secret escapes, Zoopla, Evi (the technology behind Amazon’s Echo) and many more. Another UK startup having receiving a large sum of funding recently is the Silicon Fen-based speech technology company Speechmatics. With its unique machine learning technology Speechmatics has been funded by multiple leading investors. In 2016, Speechmatics launched its new AI framework, Auto-Auto, allowing companies to add almost any language automatically.
Table showing the top 5 fastest growing sub-sectors for venture capital investment into London technology companies from 1st January 2011 until 31st March 2017.
NB: Data sourced from PitchBook. Sub sectors defined by PitchBook
London in particular has seen a huge surge in VC flows into tech in general but especially into AI and machine learning. According to the research founders of London Tech Week, this hot funding item has secured £85.75m in 2016 – 20 times the £3m raised in 2011 and is expected to continue to grow. AI has attracted an impressive £207m in VC funding over the last five years with four of the biggest AI startup acquisitions having taken place in the UK: Google’s purchase of Deep Mind, Apple’s acquisition of VocalIQ, Microsoft’s purchase of SwiftKey and Twitter’s acquisition of Magic Pony. The leading sub-sector receiving the highest investment in tech at present is fintech, having amassed £177m in the UK in Q1 of 2017 already!
According to Russ Shaw, London Tech Week ambassador and founder of Tech London Advocates: 'Over the course of the last decade London has become a global for the technology sector. More recently, our expertise in fintech, AI and robotics has shown that the city is at the cutting edge of technological innovation.’Shaw credits London’s appeal to VCs globally in particular to the city’s diversity and talent pool as well as its strong international links.
With the philosophy of fostering global connections on a Sino-British plane, Cocoon Networks’ CEO John Zai seconds this statement, highlighting the desire of Chinese VCs to invest in the UK startup scene but requiring the right infrastructure to do so, which is why he founded the company.
At our innovation hub our resident companies also believe strongly in the future of AI. We host our monthly MeetAI series, introducing new ideas and insights to the local London AI community. Furthermore we're proud to host C4DR, the Centre for Digital Revolution, a newly founded company by former Level39 founder Eric van der Kleij, which together with leading corporates co-invests into promising startups spanning AI, IoT, Blockchain and robotics. Realities Centre also calls our East London headquarters home, building a community focused on AR and VR and including related technologies such as AI and IoT, by bridging gaps between startups and corporations through demos, training, accelerations and more.
The China view:
According to Forbes, China is presently investing heavily in AI. The Chinese government backs AI strongly and focuses a large amount of research in this area, believing AI will contribute to significant growth of China’s economy over the next years.
China’s AI plans according to Liu Lihua, Vice Minister of Industry and Information Technology, include foci on robotics, self-driving cars, inventory forecasting and many more, and the country has thus far applied for 15,745 AI patents. AI technology is also incorporated in some of China’s largest e-commerce platforms such as search engine Baidu, e-commerce company Alibaba and investment holding company Tencent, as well as into traditional sectors.
According to Zhang Yayin, president of China’s Internet giant Baidu:
‘In the AI era, China can innovate not only in products, but also in technologies (…) [as] AI has become a key driving force behind Chinese companies.'
Over 40 robotics industry parks are presently being set up around the country and AI was for the first time included in the government work report Premier Li Keqiang presented to the Fifth Session of the 12th National People’s Congress in March, whereby special foci were placed on accelerating research & development, commercialization of new materials and the development of industrial clusters.
Chinese municipalities such as Beijing, home to the CAS Institute of Automation (a consortium of universities and firms that provides VC funding of 1bn RMB (§150m) to AI development) and the Zhejiang province (seat of Geely Automobile) are utilising intelligent manufacturing and internet marketing services based on AI to boost sales (source: Forbes).
Further plans include a national AI plan, which, according to Wan Gang, Minister of Science and Technology, will strengthen AI development plans and application, include policies to contain risks associated with AI, and work towards international cooperation.
Overall, China continues to emphasise its global outlook and desire to connect to the international tech market.
How does AI affect individual consumers?
AI has been playing a bigger role in people's everyday lives, as evidenced by an AI system monitoring vehicle traffic and intelligently controlling it, which was applied in East China's Hangzhou last year.
"China is already leading the world in fields such as computer vision and automatic speech recognition. We believe that AI presents the most favorable opportunity for us to lead the world", said Liu Lihua, Vice Minister of Industry and Information Technology.
What will happen next?
In order for China to become the globally leading AI force, the country's companies will need to pool their resources and begin collaborating.
"There's been a lack of technical collaboration in our AI industry. The inter-connectibility of products is poor, and there is no efficient coordination between upstream and downstream producers", said Wen Xiaojun from CCID Wise, a major Chinese think tank. He believes an industry service platform needs to be set up to boost functions including research and development, application and product examining.We need such an incubation center for AI to prosper", he added.
Cocoon Networks' outlook
At Cocoon Networks we strongly believe in Sino-British collaboration in this highly exciting and unpredictable field and are very curious to see how AI develops over the next 5 years in the Western and Eastern world. We see AI investment potentially surpassing the current industry leader Fintech in the next 5-10 years and will continue to explore the most recent developments and expert insights of London's AI ecosystem in our MeetAI series. Join us on September 13th for the next session, which will be announced under our 'Events' soon.
China is investing heavily in artificial intelligence
Big Data Robotics and AI are fuelling VC Investment in London
The hottest AI startups in 2017 (Techworld)