AI Startup Funding Booms Despite Murky Market Definitions
Funding totals for AI startups grow year-over-year, but tracking the exact pace proves difficult due to inconsistent definitions of what actually constitutes an artificial intelligence company.
Funding for artificial intelligence startups grows steadily each year, though the exact rate of growth remains difficult to pin down. Startups raise massive sums of money by leveraging the AI buzzword, with several companies securing enormous rounds in 2018. For example, Chinese facial recognition giant SenseTime raises a staggering $2.2 billion in just one year across three rounds, highlighting the massive scale of capital flowing into this category.
Other notable examples include UBTech Robotics, which secures an $820 million Series C round despite resembling a high-end toy maker, and Zymergen, a biotech company that raises $400 million. However, these massive funding rounds expose a significant problem in the tech industry. Data providers struggle to agree on what actually qualifies a company as an AI business, leading to skewed and inconsistent market tallies.
The case of Zymergen perfectly illustrates this classification dilemma. While data firms like Crunchbase and CB Insights label the company as an AI startup, Zymergen avoids the term entirely on its own website and instead focuses on molecular technology and machine learning tools. Using AI-related tools to analyze data sets does not necessarily make a company an AI startup, which means the true size and growth of the actual AI market remain clouded by overly broad definitions.