According to CB Insights’ AI in the Numbers Q2 2021 report, AI startups received record funding during Q2, a reflection of the increasing role AI-related platforms are having in different industries.
The report also shows that a record number of AI startups reached the $1 billion valuation milestone getting them “Unicorn” status. A total of 24 Unicorns were generated by the AI industry during Q2, especially in the cybersecurity and AI processor sectors.
However, investors seem to have been more interested in investing in mid-stage deal share (Series B and Series C), with deals at this stage increasing to 26% while early-stage investing decreased to 55%.
According to CB Insights, this trend suggests a maturing of the AI startup market and has been led by tech giants like IBM, Nvidia, and Microsoft, all of which have acquired AI startups during Q2.
AI has advanced considerably over the past decades with the creation of learning algorithms like deep learning and neural networks, which allow the software to learn from experience by reviewing data and using prediction-based analysis to upgrade themselves.
These applications have made them increasingly important in a world which only gets more dependent on big data and analytics
RadNet CEO Howard Burger referred to the growing role AI plays in its company by stating,
“…not only will we be seeing, I think, a greater volume of business, but that business is going to have to be handled by artificial intelligence in order to be able to accommodate the type of demand which we believe is on the horizon.”
This increasing demand also allowed a total of six AI unicorns to go public during the quarter, with all of them obtaining valuations between $2.3 and $29 billion. These unicorns were UiPath (largest IPO in the history of AI), SentinelOne, TuSimple, Zymergen, Recursion, and Darktrace.
Other important milestones in the AI Startup industry were the acquisition of Nuance by Microsoft for $19.7 billion and Turbonomic by IBM for $2 billion, which reflect the increasing attention that established companies are paying to startups in recent years.