Goldman Sachs has been particularly active in the last 2 years, backing 4 unique companies applying AI in financial technology.

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Deals and dollars to startups using AI algorithms reached record levels in 2016. The trend is revolutionizing several industries including healthcare, business intelligence, and advertising. Particularly, startups using machine learning and natural language processing to solve problems in the financial sector have piqued investors’ interest in recent years. As we mentioned in our AI heatmap, deals to AI in the financial services area have seen an uptick since 2014.

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The competition in the space is heating up as several companies focused on core AI technologies, like Sentient Technologies and Ayasdi, are bringing their products to fintech, for applications ranging from quantitative trading and sentiment analysis to threat detection and risk analytics. Just this year, over 15 companies using AI in fintech raised equity funding rounds.

The following are some of the investment highlights in this space:

  • Goldman Sachs has been particularly active in the last 2 years, participating in 6 separate deals to 4 companies: Context Relevant, Digital Reasoning Systems, Kensho Technologies, and Dataminr.
  • Baidu took a minority stake in ZestFinance this month. ZestFinance said in a press release that the two companies will “work together to apply ZestFinance’s underwriting technology to Baidu’s search, location, and payment data in order to improve credit scoring decisions in China.”
  • In the personal assistants/bots category, 4 companies — Trim, Penny, Kasisto, Cleo, and Insurify — raised funds in 2016 from investors including Social Capital, Eniac Ventures, Core Innovation Capital, and AlphaPrime Ventures.
  • In credit scoring, companies that raised funds so far this year (as of 7/22/2016) include China-based WeCash, India-based CreditVidya, United Kingdom-based Aire and TypeScore, as well as California-based ZestFinance and Applied Data Finance.
  • Some of the largest funding rounds include a $130M Series D round raised by Dataminr (analyzes twitter data to deliver real-time market information), and a $103M Series C round raised by Sentient Technologies (which is applying its algorithms to quantitative trading).
  • Nearly half of the companies on the list are still in their early-stages and have not raised beyond a seed/angel or Series A round.

A majority of the companies in the market map below, over 60%, have VC backing.

AI in finance - 20160722

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