As venture capital gets drawn to a new tech trend, I'll end up being drawn to digging into it as a matter of principle, and inevitably new business intel. It's an interesting intersection - the inverse canary in a coal mine - not that I am able to write about said clients here, but they always turn up just as an industry is about to explode. It happened with the Internet of Things (for better or for worse), with the post CES 2015 (and CES 2016) deluge flooding both the media and my inbox, and now the machine learning and artificial intelligence ones have begun to pop up before, during and after CES 2017.
Basically, when technology and venture capital intersect, it creates a forward movement in which the funding pushes the technology to advance, which funds the development of new and even more interesting things, which gets more capital into the ecosystem. In the case of AI, there're so many ramifications it's almost ridiculous - both the potential positive outcomes of its existence and a growing fear of what its existence could mean for the world at large.
Even stumbling around CES last week I saw endless signs for things with automation - automated cars, automated cookers, automated cat litter boxes, automated truck fleet management. Until last year, AI only reminded me of a pretty solid Spielberg flick; now it's boomtown in the venture community, with everyone claiming to do some form of deep learning, machine learning, natural language processing or automation.
Cash, Jobs and Hope
Those that play with the money fueling the industry and have a feel for the technology see the positive side. Mark Minevich, author of the Reuters-published Six Billion Minds (a book discussing broadly the potential of globally outsourcing) and founder of Going Global Ventures remains bullish on a growing workforce, as many do in tech including the Wall Street Journal's Christopher Mims. "I was just at the B20 Digitalization Task Force in Berlin in December, and a few things stuck with me in what they have found. 40% of economic growth will come from digitalization and technology. A 20% increase in the overall technology investment will directly result in 1% of economic growth on a global basis, which is huge."
As AI and machine learning continue to become more prevalent, the worry is increasingly becoming less about Skynet and more about the jobless. The fear is obvious; as we automate more and more jobs, there will be less for humans to do, leading to even Y Combinator investigating the ways in which a nation could usher in basic income. However, there is also a huge chance for AI to create more jobs by finding those most in need for everything from simple data entry to even simply saying "you have this on your LinkedIn, perhaps you could do this." Very basic versions have existed for years - but I can't imagine we're far from an HR system that can actively scan Twitter, LinkedIn and resumés for the perfect candidate. It's important to happen, too - Forrester predicted that robots and AI will replace 7 percent of US jobs by 2025.
Though CB Insights reported that while less venture capital investments were made in 2016, they found an uptick in AI investments across the board, including AI tech and applied artificial intelligence applications. IDC also found that AI-related hardware, software, and service businesses are set to jump from $8 billion in 2016 to $47 billion by 2020. It's had a steady climb as per the CB Insights report, unlike the spike and drop in one year in the wearables industry, one of the last major investment booms.
It's certainly go the froth that wearables had before their fall. According to Baidu's Chief Scientist Andrew Ng, "AI is the new electricity." Just as 100 years ago electricity transformed industry after industry, AI will now do the same." The business models of new emerging startups from this new, slightly troubling digital future are going to be closely linked to artificial intelligence, industrialization, and commoditization of cognition. As Peter Lee, head of Microsoft Research, said in an interview with Fortune, "Sales teams are using neural nets to recommend which prospects to contact next or what kind of products to recommend." This is the type of disruptive change that VCs are excited about funding.
"Corporate venture capital investments have expanded with a record number making first-time investments in 2016," said Minevich. "For example, Baidu launched its $200 million venture capital focused on AI. Over the last five years, the venture capital ecosystem has seen tech giants like Apple, Google, Yahoo, Facebook, IBM, Amazon, Tesla, Salesforce, Intel and Samsung acquire nearly 140 private companies working to advance AI technologies since 2011, with over 40 acquisitions taking place in 2016 alone."
According to CB Insights, as of July 2016 the US had the largest amount of AI funding at an estimated $3.1 billion. According to Pitchbook, 48% of the 79 VC deals done in the AI industry were funding seed-level companies. In comparison, the SaaS industry received 26% of VC funding for seed-level companies.
Concerns In The Community
Like any exciting industry, 2017 will definitely accelerate - acquisitions aplenty and hard? It's heaven for those looking for big, quick exits as the major league tech players vacuum up talent. This also means that, like any obvious money-growth opportunity, the good times will end the moment we have an AI startup to pin down and confusing sets of terminology that make you sound smartfail on a Pebble scale - or even smaller to make VCs think twice.
Will science fiction nightmares come true, with the robots either ruling or killing us all? Do we need to start working on ways to create a basic income before it's too late? I don't know, but the future's already arriving; AI is now taking the jobs of claims adjusters, way beyond what one would consider a computer is capable of. I've always wondered when someone would work out that my entire job is emailing people. Maybe an AI will be doing it soon and I can get some sleep.