Zero One: Venture Capitalists Poured $84 Billion Into Tech Startups
Business leaders, take note: Venture capitalists have opened the floodgates and are fueling the next wave of technology innovation with the power to disrupt companies and industries.
In fact, the flow of venture capital to emerging tech last year rivaled the investment boom of the dot-com days. According to PitchBook-NVCA Venture Monitor, venture capitalists invested $84 billion in 8,035 companies across 8,076 deals.
While most of the financing was on late-stage consumer tech companies – unicorns such as Airbnb and Lyft – enterprise tech also saw lots of action, particularly with artificial intelligence (AI) and the Internet of Things (IoT).
“There are game-changing core verticals like VR (virtual reality) and AR (augmented reality), IoT, AI, and Fintech generating massive investments,” said John Gabbert, CEO and founder of PitchBook, in a statement. “There will be winners and losers amongst these VC-backed companies but the technologies are here to stay and will truly change the game for companies and consumers.”
Business executives should pay close attention to AI and IoT and track their advancements. These technologies are driving into the enterprise at an astonishing rate.
Forrester predicts IoT will move from experimentation to business scale this year. IoT platforms, such as General Electric Predix, will evolve from general platforms to specialized ones that suit specific business use cases, thus drawing out better business outcomes.
Zebra Technologies surveyed 908 IT decision-makers and found that more than half said they’re currently executing on their IoT plans. Most spend an average of $3.1 million on IoT, and they expect this to increase over the next 12 to 24 months.
IoT can be deeply integrated into products, from automobiles to soap dispensers, or in environments, from offices and factory floors to job sites and cityscapes. It has already disrupted industries, most notably giving rise to the “power by the hour” business model.
Channel companies, too, stand to make a windfall with IoT. ABI Research predicts IoT system integration and consulting revenues will surpass $35.7 billion in 2022 from less than $17 billion last year.
In addition to IoT, AI startups will no doubt make a lot of noise this year. That’s because AI has the potential to impact every part of the enterprise, from sales and marketing to operations to product management to the call center.
There are nearly 600 discrete uses for AI across major industries, according to a McKinsey article published this month, “Artificial Intelligence: The Time to Act Is Now.” Governments can use AI to scan video of public places and identify suspicious activity. Banks, too, employ AI for fraud detection. Retailers tap AI to catch thieves. The list goes on.
“AI is positioned to disrupt our world,” the McKinsey article says. “McKinsey Global Institute estimates that rapid advances in automation and artificial intelligence will have a significant impact on the way we work and our productivity.”
Venture capitalists haven’t missed the signs, either.
Here is only a sampling:
Last summer, Google launched a venture capital firm, Gradient Ventures, to offer financing and technical mentorship to AI startups. Former founder of Google’s Brain Team, Andrew Ng, raised a $150 million AI fund. Andreessen Horwitz raised $450 million for a new life sciences fund that backs companies applying AI. Microsoft Ventures also started an AI fund.
If you want to know where the next round of innovation will happen, follow the money.
Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at firstname.lastname@example.org.