THE STATE OF ARTIFICIAL INTELLIGENCE Recent advances, startup landscape, the road ahead The technology market intelligence platform. CB Insights software lets you predict, discuss, and communicate emerging technology trends using data in ways that are beyond human cognition. www.cbinsights.com 2 A FEW OF OUR HAPPY CUSTOMERS The most publicly reference-able customers of anyone in the industry “CB Insights' intuitive user interface, analytical capabilities, and detailed investment information create a very powerful tool for our team's research needs.” Nate D’Anna Cisco, Corporate Development See what other customers have to say at http://www.cbinsights.com/customer-love www.cbinsights.com 3 ACCESS THE AI COLLECTION WITH 1.6K+ COMPANIES Collections, our CRM for Innovation, lets your team easily use our data to create, and collaborate on market maps, target lists and sector reviews. No more unwieldy spreadsheets, email chains, and PowerPoint. Knowledge management done right. Click here for the AI collection: https://www.cbinsights.com/collections/76371/company www.cbinsights.com 4 TABLE OF CONTENTS 6 Tech industry’s AI revolution Trends in artificial intelligence, rising interest in private companies 15 Why now? Macro trends driving AI boom 23 The state of AI today Definitions, startup funding, applications, robotics 72 Emerging applications AI in gaming, reg tech, expert automation, and more 80 Where we are headed The ‘artificial general intelligence’ debate www.cbinsights.com 5 THE TECH INDUSTRY’S AI REVOLUTION www.cbinsights.com 6 ‘AI IS THE NEW ELECTRICITY’ “Just as electricity transformed almost everything 100 years ago, today I actually have a hard time thinking of an industry that I don’t think AI will transform in the next several years.” Andrew Ng Former chief scientist at Baidu, Co-founder at Coursera source: https://www.gsb.stanford.edu/insights/andrew-ng-why-ai-new-electricity www.cbinsights.com 7 GOOGLE’S AI GUESSED (MOST OF) OUR DOODLES Yes, even that garden hose… https://aiexperiments.withgoogle.com/ www.cbinsights.com 8 IBM WATSON EXPANDS ITS REACH From Watson health cloud to IoT solutions, IBM is quickly expanding the reach and adoption of its cognitive computing platform across multiple industries. source: http://researcher.ibm.com/researcher/view_group.php?id=5948 www.cbinsights.com 9 ALEXA AND THE VOICE REVOLUTION From calling an Uber to cooking tips, Amazon’s Alexa is changing how you interact with apps. “Alexa, ask My Chef “Alexa, ask Uber to “Alexa, ask Fitbit how what’s expiring.” request a ride.” I slept last night. “Alexa, what’s in the “Alexa, ask the bartender, “Alexa, tell Tide I have news?” what's in a Tom Collins?” a juice stain.” source: /www.amazon.com/alexa-skills/ www.cbinsights.com 10 RACE FOR INTELLIGENCE Google, Facebook, Apple, Intel and other big corporations acquiring AI startups 200+ 30+ 11 Acquisitions M&A deals in Acquisitions by since 2012 Q1’17 Google Google is the most active acquirer of AI startups, having acquired 11 startups since 2012. Apple, which has been ramping up its M&A efforts, ranked second with 7 acquisitions under its belt. Newer entrants in the race include Ford, which acquired Argo AI for $1B in Q1’17, cybersecurity company Sophos, and Amazon. https://www.cbinsights.com/blog/top-acquirers-ai-startups-ma-timeline/ www.cbinsights.com 11 MARRYING PATENTS WITH CB INSIGHTS DATA Analysis of patents provides forward-looking insight into corporate product strategy and innovation, as well as where technology innovation is happening and going. https://www.cbinsights.com/patent-search-engine-analytics www.cbinsights.com 12 AI PATENTS OF MICROSOFT, GOOGLE, AMAZON, FB, APPLE as of 12/12/2016 Google patent to “predict new views from existing images” using deep learning Note: The patent filing process involves a significant time-lag before the publishing of patent applications. This delay can range from several months to over two years, meaning that records prior to 2013 are likely complete at Facebook’s patent for “predicting labels using deep the time of analysis, but there may be applications from 2014 on that have yet to be published. learning model” https://www.cbinsights.com/blog/google-apple-microsoft-ai-patents/ www.cbinsights.com 13 MEDIA TRENDS: AI VS BIG DATA The Battle For Top AI Talent Only Gets Tougher From Here Ford Goes Big On AI With $1B Investment Microsoft Bets On General Artificial Intelligence With Maluuba Acquisition Samsung To Acquire Artificial Intelligence Firm Viv, Created By Siri Makers Google’s Alphago AI Beats Human In First Game Of Go Contest www.cbinsights.com 14 Why now? MACRO TRENDS, RECENT ADVANCES www.cbinsights.com 15 Big Data + Processing Power = New Age for Artificial Intelligence www.cbinsights.com 16 "Deep learning is almost like the brain... It's unreasonably effective. You can teach it to do almost anything. But it had a huge handicap: It needs a massive amount of computation. And there we were with the GPU, a computing model almost ideal for deep learning." Jen-Hsun Huang CEO, NVidia https://www.forbes.com/sites/aarontilley/2016/11/30/nvidia-deep-learning-ai-intel/ www.cbinsights.com 17 HORSEPOWER FOR AI: NVIDIA GPU’S DOMINATE MARKET NVidia GPUs, which initially targeted the gaming industry, are now widely used for training deep neural networks. Other big corporations like Intel and Google have focused their efforts on AI chips as well, with Intel recently acquiring startup Nervana Systems, and Google developing a custom chip called “Tensor Processing Unit.” https://www.nvidia.com/en-us/deep-learning-ai/ www.cbinsights.com 18 STARTUPS RIDING THE DEEP LEARNING WAVE To name a few, Captricity, which extracts information from hand- written data, raised $49M in equity funding from investors including Social Capital and New York Life Insurance Company. Teradeep received funding in Q1’16 from the corporate venture arm of XILINX to make programmable integrated circuits. Healthcare startups here include IBM-backed precision medicine startup Pathway Genomics and diagnostics company Enlitic. https://www.cbinsights.com/blog/deep-learning-ai-startups-market-map-company-list/ www.cbinsights.com 19 OPEN SOURCE SOFTWARE ACCELERATES RESEARCH Google open sourced its TensorFlow machine learning library in 2015, and reportedly “more than 480 people have contributed directly to TensorFlow” since then. Other libraries include Deeplearning4J from startup Skymind and Microsoft’s Cognitive Toolkit. www.cbinsights.com 20 RECENT ADVANCES IN AI ELON MUSK LAUNCHES NEURALINK, A VENTURE TO MERGE THE HUMAN BRAIN WITH AI March 27, 2017 www.cbinsights.com 21 “Despite these astonishing advances, we are a long way from machines that are as intelligent as humans—or even rats. So far, we’ve seen only 5% of what AI can do.” Yann LeCun Director of research, Facebook https://www.wsj.com/articles/whats-next-for-artificial-intelligence-1465827619 www.cbinsights.com 22 Where are we at? AI TODAY, STARTUP TRENDS, APPLICATIONS www.cbinsights.com 23 A few AI applications today A LOT OF NUMBER VISION LANGUAGE CRUNCHING PROCESSING AUTO TECH AND DRONE BUSINESS INTELLIGENCE CHATBOTS COLLISION AVOIDANCE NEWS & MEDIA IOT PREDICTIVE E-COMMERCE SEARCH MAINTENANCE CONTENT CREATION SMART HOME VOICE SEARCH RECOMMENDATIONS PICK AND PLACE ROBOTS INTERFACES FORECASTING MODELS HEALTHCARE DIAGNOSTICS TEXT ANALYTICS www.cbinsights.com 24 WHAT WE DEFINE AS “AI” IN THIS REPORT: ➢ This report contains an analysis of over 1,600 private companies found using various keywords related to artificial intelligence technologies in the CB Insights database. ➢ Our AI category includes startups developing industry agnostic AI solutions like advanced vision and language processing systems, as well as startups using predictive algorithms to solve problems in specific industries, like healthcare, cybersecurity, commerce, and finance. The applications range from e-commerce search engines and chatbots for CRM to deep learning-based cybersecurity solutions and machine learning-assisted medical imaging and diagnostics. ➢ Our funding analysis excludes on-demand taxi service, AR/VR and hardware-focused robotics startups (robotics is included as a separate section at the end of this report). It includes private companies working on driverless cars as well as robotic software startups. Only equity funding rounds and convertible notes are included in funding charts. www.cbinsights.com 25 AI Equity Funding Since 2012: $14.9 BILLION across 2250 DEALS www.cbinsights.com 26 ARTIFICIAL INTELLIGENCE: ANNUAL FUNDING HISTORY DEALS CONTINUE TO 2012-2016 BREAK PREVIOUS RECORDS Deals to AI startups increased 4.6x in the last 5 years, from 150 in 2012 to 698 in 2016. The top rounds in 2016 went to auto tech company Zoox ($200M Series A) and cybersecurity startup StackPath ($180M private equity). www.cbinsights.com 27 ARTIFICIAL INTELLIGENCE: QUARTERLY FUNDING Q1’17 MOST ACTIVE Q1’12-Q1’17 (as of 3/23/2017) QUARTER FOR AI STARTUPS Before the close of Q1’17 (as of 3/23/17) AI startups received 245 deals and $1.7B in funding. Nearly 48% of the deals in Q1’17 were in the seed/angel stage, indicating newer companies are continuing to enter the space. www.cbinsights.com 28 ARTIFICIAL INTELLIGENCE: GLOBAL DEAL SHARE INDUSTRY STILL 2012-2016 NASCENT, SEED DEALS DOMINATE Early-stage deals dominated across the years, accounting for 67% or more of the total deal share. Mid and late- state deals have remained fairly constant during this period. Some of the late-stage companies that raised recently include Lattice Engines, SoundHound and NIO. www.cbinsights.com