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CB Insights: AI venture deals in Q2 2020 slump to lowest since 2017

Venture capital assist for AI startups fell sharply within the second quarter of 2020 because the pandemic lastly caught up with a sector that originally appeared resistant to its financial affect.

According to a new report from CB Insights, AI-related startups raised $7.22 billion in 458 offers throughout the three months ending June 30. Both figures have been down from the $8.Four billion invested in 516 offers throughout the first quarter of 2020.

The newest report notes that the 2020 funding numbers stay skewed, as a consequence of a $2.25 billion spherical raised by Waymo in Q1. The firm prolonged that spherical to $three billion, with an extra $750 million of funding that fell into CB Insights’ Q2 numbers. But it was the drop within the variety of offers that raised concern. Those 458 offers in Q2 2020 represented the bottom quantity for the reason that 387 enterprise offers for AI firms in Q2 2017.

The decline in offers seemed to be pushed by fewer seed funding rounds. Instead, enterprise capitalists appear to be placing extra money into mature AI firms. The report listed 15 “mega” funding rounds of $100 million or extra within the quarter.

Heading into 2020, AI had change into one among enterprise capital’s hottest sectors. AI startups raised a document $26.6 billion in 2019, spanning greater than 2,200 offers worldwide, up from 1,900 offers totaling $22.1 billion in 2018. Before the affect of the coronavirus actually hit, the business appeared to be holding regular, with $8.Four billion raised throughout 506 offers within the first three months of 2020.

Still, the U.S. continued to keep up its edge in AI startup funding, with 39.5% of offers (181), in comparison with 15.5% (71) for Chinese AI startups. U.S. AI startups raised $4.224 billion in comparison with $1.350 billion in China.

As the pandemic unfold throughout the globe this yr, AI appeared well-positioned to make information extra helpful in areas equivalent to well being care analysis and tracing. Indeed, the report stated AI firms working in health-related fields represented 84 offers in Q2, up from 82 in Q1. But different areas, equivalent to AI for finance, noticed a lower in curiosity.

While the IPO market stays shut, the report tracked 47 acquisitions within the quarter, up from 29 in Q1.

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