12 Mar 2021
Posted in Business Fundamentals
Low-value deals continued to dominate VC funding activity in AI space, while big-ticket deals registered growth in 2020
Low-value venture capital (VC) funding deals (investments less than or equal to US$10m) volume shrank as overall VC funding activity in the artificial intelligence (AI) space declined during the COVID-hit 2020. The share of low-value deals as a proportion of total deal volume also declined, however, it still continued to account for a dominant share. Meanwhile, high-value deals (investments worth greater than or equal to US$100m) registered growth in volume as well as share, according to GlobalData, a leading data and analytics company.
A total of 2,176 VC funding deals (with disclosed funding value) were announced in the AI tech space during 2020. This was a decline from 2,333 VC funding deals (with disclosed funding value) in 2019.
The number of low-value deals also declined from 1,669 in 2019 to 1,434 in 2020. Despite the decline, low-value deals continued to dominate the VC funding landscape in the AI space – though its share of total deal volume decreased from 71.54% in 2019 to 65.9% in 2020.
On the other hand, the number of deals valued more than US$10m increased from 664 in 2019 to 742 in 2020, and the corresponding share as a proportion of the total deal volume also increased from 28.46% in 2019 to 34.1% in 2020. The number of high-value deals also increased from 50 in 2019 to 76 in 2020 and the corresponding share as a proportion of the total deal volume increased from 2.14% in 2019 to 3.49% in 2020.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “VC investors are more cautious now due to volatile market conditions amid the COVID-19 pandemic, yet they continue to show interest in companies working in the AI space. VC investors are not shying away from committing to big-ticket financing deals in companies at the scaling stage.”
Interestingly, 2019 failed to witness any billion-dollar deals, while 2020 managed to see two billion-dollar deals despite the COVID-19 outbreak. These deals included US$1.9bn secured by the US-based SpaceX and US$1.7bn raised by China-based Manbang Group.