Artificial intelligence’s potential to transform a growing range of industries has venture capitalists writing checks to promising startups at a rate that will likely set a new record in 2019 for the industry.
According to the Q3 2019 data from the National Venture Capital Association, 965 AI-related companies in the U.S. have raised $13.5 billion in venture capital through the first 9 months of this year. That should eclipse the 1,281 companies that raised $16.8 billion in 2018, according to the 3Q 2019 PitchBook-NVCA Venture Monitor.
In a sign of the sector’s relative youth, NVCA also notes that the average deal size and valuations still tend to fluctuate quite a bit from quarter to quarter. That suggests the numbers can still be skewed by the occasional mega-round for an AI startup.
Still, AI startups have clearly moved well past early, experimental stages, which tend to attract lots of little bets as investors explore the terrain.
NVCA’s report notes that the number of later-stage funding rounds have been surging “as underlying technologies and the startups powering them mature and as the technology’s uses have expanded.”
Over the past two quarters, NVCA has seen new highs for number of late-stage deals for AI companies, including $3 billion invested in about 75 such deals.
Overall, the pace seemed to quicken in September. Among the slew of deals, Fiddler raised $10.2 million for explainable AI; OpenSpace raised $14 million for an artificial intelligence (AI) platform that tracks construction projects; Eko raised $20 million for AI heart disease monitoring; AppZen raised $50 million for AI-driven expense reporting; and Kaia raised $8 million to treat chronic pain with AI-guided exercise.
AI investing is also set to outperform the overall VC market.
While still robust, NVCA projects that the number of deals and the overall value will drop slightly from 2018. Through nine months, $96.7 billion has been raised across 7,862 deals. In 2018, $137.6 billion was raised across 10,242 deals.