VCs invested over $ 75B in AI startup in 2020

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Investment in AI is growing at an accelerated pace, according to a new report from the Organization for Economic Co-operation and Development (OECD). The group in Paris, France found that the US and China are leading the rising funding wave, taking together 81% of the total amount invested in AI startups last year, while the EU, UK increase their support but lag significantly behind.

The venture capitalist (VC) sector tends to pretend general investment trends, indicating that the AI ​​industry is maturing. As the AI ​​industry matures, the median amount per year grows. Investment, there are more very large investments and relatively fewer investment transactions in the early stages of financing, ”the report reads.

The OECD study analyzed VC rounds in 8,300 AI companies worldwide and covered transactions between 2012 and 2020, documented by capital market analysis firm Preqin. According to the results, the global annual value of VC investments in AI startup grew from $ 3 billion in 2012 to almost $ 75 billion in 2020. Funding increased 20% last year alone, with startups based in the US and China gaining more than 80 % of all investment in 2020. The European Union followed with 4%, followed by the UK and Israel with 3%.

The report also found that growth in AI investment in U.S. companies has been stable from 2012 onwards, reaching $ 42 billion by 2020. Chinese companies saw an increase in 2017 and 2018 followed by a decline in 2019 equivalent to $ 17 billion in 2020.

Companies that developed driverless vehicles and mobility technologies attracted the largest investment of all AI companies, drawing $ 19 billion in VC money in 2020 and $ 95 billion from 2012 to 2020. The second largest segment was healthcare, medicine and biotechnology, which lagged in 16% of the investment amount by 2020. VC funding rounds in these related industries doubled from $ 6 billion in 2019 to $ 12 billion in 2020 – probably due to the pandemic. AI business processes and support services will start in third place in VC investments in 2020, meanwhile – also likely due to the pandemic that motivated digital transformations and remote and hybrid workflows.

Potential and risks

The large investment in autonomous vehicles reflects the belief among investors that AI has the potential to address the shortage of transport workers. According to the American Trucking Associations (ATA), the sector had short 60,800 drivers in 2018. Unchecked, ATA expects the shortage to swell to more than 160,000 drivers nationally by 2028. In a worrying sign, Britain was forced to recruit the army to drive fuel trucks to service stations at due to lack of available drivers.

Momentum in life sciences is less stable – Deloitte reports that healthcare organizations vary significantly in their AI investments. But the company has embraced AI with open arms and leveraged it to automate expensive back-office and customer-facing tasks. Over a quarter of all AI business initiatives are already in production, and more than a third are in advanced stages of development, an IDC study found. And just over half of companies said they would spend $ 500,000 to $ 5 million on AI initiatives by 2021, up 34% by 2020, according to the App.

But these sectors face challenges as AI systems come under greater control. While 22.7% of employees feel that AI will start to have a big impact on their industry within the next 1 to 2 years, 54% are either moderate or very worried that AI will disrupt their jobs negatively, according to a survey from 2021. Furthermore, AI is not a silver ball – as research reveals. In a recent report, only 10% of business leaders reported significant financial benefits from their AI investments. And an MIT task force predicts that technologies like fully autonomous cars will not come for at least 10 years.


As an expanding cohort appears to be making money on the continuing boom in AI investment, the OECD report shows that there are plenty of runways. This is even despite the fact that some startups are doubling down on their use of AI technologies. In a study by MMC Ventures from 2019, 40% of alleged AI startups in Europe – 2,830 – showed no use for AI in their products.

A Forbes piece notes that over the past decade, overall funding and the average round for AI companies have increased at a reliable pace. In 2010, the average early round for AI or machine learning startups was around $ 4.8 million. In 2017, total funding increased to $ 11.7 million for first-round funding at an early stage – an increase of more than 200%. And in Q2 2021, AI startups attracted a record $ 20 billion in funding despite a drop in contract volume.


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