Deal activity in AI space showcased fluctuating trend in 2019

Venture capital (VC) funding and mergers & acquisitions (M&A) activity in the artificial intelligence (AI) space showcased a fluctuating trend across all the quarters in 2019, according to GlobalData, a leading and data analytics company.

VC funding and M&A deal activity in the AI space remained inconsistent in both value and volume terms during Q1 2019 – Q4 2019. However, despite the fluctuations, both VC and M&A deal volume showcased an increase in Q4 2019 compared to Q4 2018. In contrast, VC and M&A deal value declined in Q4 2019 compared to Q4 2018.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “AI start-ups have been getting lots of VC investors’ attention for the past few years. However, the growth in deal value has slowed recently, which seems to be a short-term phenomenon with long-term prospects likely to remain positive.”

Nevertheless, in terms of year-on-year (y-o-y) growth, both VC funding and M&A deal value and volume increased in 2019.

VC funding deal activity in the AI space remained inconsistent in both value and volume terms during Q1 2019 – Q4 2019. Despite the fluctuating trend, VC deal volume across all the quarters in 2019 remained above Q4 2018 level. In contrast, none of the quarters in 2019 managed to surpass the total funding value of Q4 2018.

Overall, VC funding deal volume increased by 4.2% in Q4 2019 compared to Q4 2018 while deal value decreased by 28.6% during the period. On the other hand, VC funding mostly declined in value terms during Q4 2018 – Q4 2019 period, barring a marginal increase in Q2 2019.

The high VC funding value in Q4 2018 was due to relatively more deals worth above US$100m being announced. Q4 2018 witnessed 22 announced deals worth upwards of US$100m compared to nine such deals announced during Q4 2019.

Akin to VC funding, M&A activity showcased a fluctuating trend across all the quarters in 2019, however the fluctuation was more pronounced in terms of value. Despite a decline in deal volume, Q2 2019 witnessed a sudden spike in deal value on the back of Salesforce’s announcement of its US$15.7bn acquisition of Tableau Software, a provider of analytics software solutions. However, it was followed by two straight quarters of decline in value, while deal volume kept growing.

Bose adds: “Despite the decline in deal value in recent quarters, big players across all industries have been clearly seeing the growing significance of AI and the technology has also remained a major focus for tech leaders. This is also evident from the involvement of several tech giants in the acquisition of AI companies. Tech giants such as Salesforce, Intel, Apple, Facebook, Cisco and Accenture have all announced acquisitions of AI companies during 2019.”

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