17 Mar 2020
Posted in Business Fundamentals
VC funding activity in AI technology space remained steady despite fewer big ticket deals in 2019, says GlobalData
The artificial intelligence (AI) technology space witnessed growth in venture capital (VC) investments volume and value in 2019 despite fewer big ticket deals, according to GlobalData, a leading and data analytics company.
A total of 2,018 VC funding deals (with disclosed funding value) worth US$31.8bn were announced in the AI tech space during last year. This was a growth from 1,627 VC funding deals (with disclosed funding value) worth US$30.7bn in 2018.
While the deal volume grew by 24% in 2019 compared to 2018, deal value grew by only 3.6%, indicating a decline in the average deal size. The average deal size, which stood at US$18.9m in 2018, declined to US$15.8m in 2019. The decline could be attributed to the announcement of relatively lesser number of big ticket VC deals in 2019 compared to 2018.
The number of US$100m+ deals decreased from 64 in 2018 to 60 in 2019. The share of such deals as a proportion of the total deal volume and value also decreased from 3.3% and 45.2% in 2018 to 2.2% and 37.4% in 2019, respectively. Moreover, 2019 also did not witness the announcement of any billion-dollar deal, whereas 2018 witnessed one such deal. On the other hand, low value deals (investment <=US$10m) accounted for more than 70% of the total deal volume in 2019, which is an increase from 67.7% share in 2018.
China experienced the most notable decline in the announcement of US$100m+ deals, with the country witnessing the announcement of only 10 such deals (US$2.1bn) in 2019 compared to the announcement of 26 such deals (US$6.9bn) in 2018.
In contrast, the US experienced growth in the announcement of US$100m+ deals from 31 (US$6.2bn) in 2018 to 37 (US$8.5bn) in 2019, offsetting the decline in China.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “While the VC investors remained cautious in committing big ticket investments in China due to its trade tensions, slowdown and mounting debt, the US was the savior and remained the undisputed leader in VC fund-raising for AI-start-ups. Though VC funding activity in China was initially expected to rebound during 2020, it would be interesting to see how the situation unfolds post the coronavirus outbreak.”