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Ovum: AI start-up acquisitions surpass $2.5bn

Posted: 26 October 2016 | By Darcie Thompson-Fields

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The world’s leading technology firms have spent more than £2.5 billion on acquiring artificial intelligence start-up firms in the past five-years.

The figure was revealed to Access AI by leading analyst  firm Ovum, who have been conducting a series of research notes into the ways AI is (and will be) used in different verticals and applications.

According to Senior Analyst Consumer Technology Francesco Radicati , who was speaking to Access AI in London this month, between 45 and 50 start-up companies have been acquired in this period, with Google the biggest buyers, with 10.

Radicati, who is based in San Francisco, revealed only 13 of those companies acquired have disclosed their sales figure, which amounts to $2.5 billion. Start-ups that have not received substantial investments are typically not obligated to reveal sale numbers.

“We have a lot of people now looking at AI,” he said. “ We have been conducting a lot of research and my focus has been on what it is and who the companies are buying, the likes of Google and Twitter. I’ve found something between 45 and 50 acquisitions in the last five years or so – all early stage start-ups, some of which haven’t yet reached a stage where they’ve received any investment.

Radicati said he expects the majority of start-up businesses to be acquired and absorbed by the leading players in the market.

Significiant acquiistions of note include Google’s capture of British DeepMind Technologies in 2013 for around $600 million. Google’s list also includes DNNresearch (2013), EMU (2014), Jetpac (2014), Granata Decision Systems (2015), Tiemful ( 2015), Moodstocks (2016), Api.ai (2016).

Facebook, Twitter, Microsoft, IBM, Intel, Apple and Yahoo also continue to be heavily active.  A full list of acquistions since 2011 can be found through the CB Insights website by clicking here 

“The way I see it, is that AI is a thing which can’t sustain a business on its own,” added Radicati. “If I was to assume any AI company could stand on its own, it would be DeepMind. I won’t presume to guess whether Google spins it off as a separate thing or not. DeepMind has started snapping up start-ups itself now it has the power of Google behind it.”

Market value rising

Research firm Tracita recently forecasted that global revenue from Artificial Intelligence products and services will top $643.7 million this year, rising to almost $37 billion by 2025 – a 57 fold increase.

According to the report (published in August) technologies including machine learning, deep learning, computer vision, natural language processing (NLP), machine reasoning, and strong AI will be deployed in some capacity in almost every industry and will significantly change existing business models while simultaneously creating new ones.

“Some artificial intelligence use cases – such as image recognition, algorithmic securities trading, and healthcare patient data management – have huge scale potential, while others are niche applications,” says research director Aditya Kaul.  “Likewise, a few key industry sectors including consumer products, business services, advertising, finance & investment, media & entertainment, and defense applications will drive significant revenue for AI software implementations in addition to AI-driven hardware and service sales, but during the coming decade the technologies will have an effect on almost every conceivable industry sector.”

 

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