Deal activity in artificial intelligence has now hit record highs for two quarters straight.
Deal count had already leapt to 24 in Q4’15, ten more deals than the previous quarter. The trend continued in Q1’16, with deals reaching a 5-year quarterly high, and passing the 25-deal threshold.
However, total funding dropped 18% to $83M from $101M in Q4’15, when over 20 companies raised funds.
Our artificial intelligence category covers startups primarily focused on developing AI technologies, across areas including image processing, natural language processing, machine learning, deep learning, and predictive APIs, among other core applications.
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Our analysis includes all equity funding rounds and convertible notes. Note: We expanded our definition of AI and published a June 2016 update to this data here.
Quarterly financing history
Deals to AI-focused startups increased nearly 7x over the last five years, from 4 in Q1’11 to 27 in Q1’16. Around 15% of the deals in Q1’16 went to companies focused on AI applications in healthcare. This includes a Series A round raised by patient-monitoring company AiCure and a seed round raised by deep learning-based dementia prediction startup Avalon AI.
Funding to AI startups peaked in Q4’14 at $201M, driven by a $103.5M Series C mega-round raised by Sentient Technologies. Funding dollars dropped nearly 59% from that quarter to the $83M seen in Q1’16.
Deal share by stage
A majority of the deals in AI over the past 5 years, 74%, went to early-stage startups raising seed/angel or Series A rounds. Over 80 companies raised seed/angel rounds and over 40 startups raised Series A rounds in the last five years. Some of the largest early-stage rounds were raised by Skytree, Vicarious Systems, and Expect Labs.
Late-stage deals (Series D and beyond) were less than 1% by volume. The “other” category includes convertible notes, corporate minority rounds, and equity rounds not attributed to a particular stage.
Most well-funded AI startups
California-based Sentient Technologies, backed by investors including Horizon Ventures and Tata Communications, continues to hold its spot as the most well-funded startup in AI, since the last time we dug into these numbers last year. The company has raised more than $140M in equity funding so far.
The second-most well funded startup on the list is Ayasdi, backed by investors including Khosla Ventures and Kleiner Perkins Caufield & Byers.
The ranking below is based on equity funding rounds raised and excludes debt.
|4||Digital Reasoning Systems|