
AI startups raised $6.9B in Q1 2020 - noelceta
https://angel.co/today/stories/ai-startups-raised-6-9-billion-in-q1-2020-a-record-setting-pace-before-coronavirus-17659
======
boltzmannbrain
1\. Many startups claiming AI are simply doing things with data; research
shows two-fifths have no AI programs in their products [1].

2\. Round-closing announcements trail the actual closing by several months.
Not to mention the actual raising and diligence takes months (even more so for
larger/later rounds). Thus the $ reported here does not factor in covid19 and
the current economic crisis, as implied.

[1]
[https://www.ft.com/content/21b19010-3e9f-11e9-b896-fe36ec32a...](https://www.ft.com/content/21b19010-3e9f-11e9-b896-fe36ec32aece)

~~~
axegon_
I've spent an unhealthy amount of time at presentations, conferences, seminars
and meetups. With that, on your first point, I'm more inclined to believe
somewhere around 90% have absolutely no "AI" or "ML" for that matter in their
products. And a large fraction of those who do have re-used existing open
source solutions without digging a lot into them. De omnibus dubitandum est,
of course, but this is the impression I get.

~~~
rjdagost
Your suspicion is largely correct, in my experience. I've worked as a
consultant on a number of different AI / ML projects for start-ups. Most
aren't doing anything all that new or groundbreaking from an ML point of view.
Their real innovation is usually more about applying ML to industries / areas
where it hasn't been used much before. But that doesn't get the investor
dollars flowing in, so the founders try to make it seem like they have some
radical new ML breakthrough. And in recent times, it has worked.

~~~
axegon_
> And in recent times, it has worked.

This is what __REALLY__ bugs me. Personally I'd love to see money poured into
actual R&D rather than people abusing the "ML" and "AI" acronyms. Investors
don't care about your R&D at all and commonly see it as a huge risk factor.
Which it is of course. A semi-working prototype has a much better chance of
succeeding so they stick to that.

But as a consequence many people(myself included) are not even bothering with
pitching anything to anyone and invest their own money, time, resources and
savings into it. Blocking? Yes. Painful? Absolutely. Slow? Incredibly. I'm
sure the next AI winter is around the corner, if it isn't here already: The
virus outbreak might be the catalyst that triggers(or has triggered) it, given
the staggering amount of people going full "I have AI which will provide a
cure, vaccine and time travel to go back in time and warn the world, just
gimme cash". I doubt anyone would deliver on any of those promises(and that's
me being optimistic). But the crisis will likely push a lot of investors to
pour millions into the empty promises that have a few buzzwords thrown in. I
hope I'm wrong.

~~~
rjdagost
I share your frustration. If you're trying to be realistic and straight-
forward about the limitations of AI/ML, you're getting little interest from
investors. Here's an anecdote. I was at an "AI in drug discovery" conference 2
years ago. One of the presenters, the founder of a drug discovery start-up,
emphatically made the claim in a talk that "we should deliberately overhype AI
in drug discovery, to raise awareness of what we as an industry can
accomplish". I was gobsmacked by this. And yet, in the social mixer
afterwards, the investors I spoke with LIKED this approach- they said the
boastful founder was bold and visionary, and they didn't care that he was
exaggerating the capabilities of his company. So, that's why all we hear is
hype- founders are just responding to investor incentives.

That's also why I work as a freelance consultant and not as a founder. I think
that autonomous driving (rather, the lack of such) is going to be what
triggers the next AI winter. Too much money and hype, too little results for
too long- the rope is wearing quite thin from what I can see.

~~~
axegon_
I think the autonomous driving, while a factor, will not be as much of a kick
as covid-19 cure and/or vaccine. I mean all the best to everyone trying and I
hope someone proves me wrong about this by actually discovering a drug/vaccine
through AI. But as far as autonomous driving is concerned, at least there are
some visible results. Not as advertised and(to my mind at least) but most
importantly not that valuable but at least there's SOMETHING on the table....

------
te_chris
[https://a16z.com/2020/02/16/the-new-business-of-ai-and-
how-i...](https://a16z.com/2020/02/16/the-new-business-of-ai-and-how-its-
different-from-traditional-software/) a very good take.

Most AI startups are struggling to scale because models are hard to scale and
generalize compared to SaaS. There'll be some fortunes made for sure, but
we're still very early in building out these businesses and mostly these seem
to be VC's who are (were?) desperate for "deep-tech" portfolio items to make
them sound "bleeding-edge" at CogX, Davos, that thing in Aspen, etc.

~~~
motohagiography
Seconded on this article. I shout from the rooftops to anyone who will listen
that for ML, "the confusion matrix _is_ the product," which summarizes much of
what they say. The only thing I add to that adage now is that a meaningful
product is a weighted function of Relationships, Data, and Expertise.

Most ML companies have one, funded ones have two, and profitable ones have the
right balance of three. Funding an ML company that isn't 85th percentile on at
least two is dumb.

------
xiaolingxiao
The key bit of information from this ([https://venturebeat.com/2020/04/14/ai-
startups-raised-6-9-bi...](https://venturebeat.com/2020/04/14/ai-startups-
raised-6-9-billion-in-q1-2020-a-record-setting-pace-before-coronavirus/)) is
that "capital flows disproportionally into large late-state deals." I would
read this as a lagging indicator of how "hot" the field is. Most of the
companies have found their "niche" and identified the actual problems that
need to be solved; like other commentators have said, these problems may only
be tangentially related to ML models themselves. These companies are currently
scaling up and locking themselves into the market. Given how long the sales
cycle is and how sticky it may be in enterprise, this means now is not a great
time to start a company just doing "AI".

------
thereyougo
I expected to see a list of the startup names and how much they raised.

------
lorey
What's the value of this link over the original one?

Original: [https://venturebeat.com/2020/04/14/ai-startups-
raised-6-9-bi...](https://venturebeat.com/2020/04/14/ai-startups-
raised-6-9-billion-in-q1-2020-a-record-setting-pace-before-coronavirus/)

------
say_it_as_it_is
What percentage of these "AI" startups do you think are doing no more than
traditional automation with technology? Applying deep learning to do no more
than what can be done with more accessible technology is like using Haskell on
steroids, ensuring that no more than a few people will ever be able to
maintain it.

~~~
parkaboy
Pretty sure it's mainly platforms. [https://hbr.org/2020/03/navigating-the-
new-landscape-of-ai-p...](https://hbr.org/2020/03/navigating-the-new-
landscape-of-ai-platforms)

I've personally been seeing several pop up for helping with
training+deployment for edge-oriented applications like Edge Impulse and
Latent AI.

~~~
boltzmannbrain
Latent Sciences?? [https://latentsci.com/](https://latentsci.com/)

~~~
parkaboy
Were you referring to when I brought up Latent AI? If so, this is them:
[https://latentai.com/](https://latentai.com/)

------
yahyaheee
This is an insane amount of funding when you look at the projected revenue for
machine learning over the next couple years.

Maybe those projections are wrong, and I certainly love all the energy in this
space, but it feels like a lot of investors are going to get burned.

------
tkyjonathan
Almost none of the company leaders or even VCs fully understand what AI even
is or does. They just like to hear thats its there.

If you don't have some AI in your company, you won't get investors.

~~~
kavalg
Is it really that bad? I thought investors care more about business model and
growth potential.

~~~
developerdylan
It isn't THAT bad. Investors definitely care more about model and growth
potential. But you will certainly run into those who ask "How are you
integrating AI into your platform?" without any real idea about what that
means.

------
correlator
Incentives are really messed up here. Tacking the letters "AI" on the end of
your company name will increase it's multiple. It will force your engineers to
call their rules engine "AI" when on calls with customers. It's really
unfortunate.

------
xiaolingxiao
Is there a break down of percentage allocated from seed, series A, B, ... all
the way down to F rounds?

------
brenden2
I was hoping the bubble had burst by now, but it sounds like it might not be
there yet.

------
barrenko
"Anonymous Indians"

~~~
barrenko
Was not trying to be racist, it's just a Twitter term for fake AI startups
(started by one Indian man).

