7 Artificial Intelligence Focused VC Funds
As responsible investors, we want to invest in proven companies and technologies that have put in some miles, while keeping one eye on what may be coming towards us on the road ahead. Plus, it’s just cool to see what’s happening at the forefront of any industry, even if most ideas (and more than a few venture capital dollars) eventually burn up in the light of day. Artificial intelligence (AI), despite all the news headlines, is still a young industry with thousands of startups but very, very few companies reaching a stage of maturity where we could and should invest a few shiny coins. But it’s coming. One way—other than to read Nanalyze, of course—to stay up-to-date is to follow the money. Most venture capital firms are betting the bank on AI, but you would be well served to watch where the best and brightest minds in the industry make there bets – like the top 12 venture capital firms which we’ve listed here.
While those firms are generalists, investing in a wide range of technologies across many industries, specialization in AI is starting to take shape in the VC world. Below we tell you about seven new AI focused funds that think artificial intelligence is the smartest investment around.
Driving Toward a Future of AI
Parent Company: Toyota
Fund: Toyota AI Ventures under Toyota Research Institute
Fund Total: $100 million
Less than two years ago, Toyota put down $1 billion on a research lab in Silicon Valley to develop AI, robotics and related technologies. Now the company has created a fund under the Toyota Research Institute called Toyota AI Ventures. The $100 million fund will take over the current AI portfolio under TRI, which includes three startups: Nauto, SLAMcore and Intuition Robotics. Data firm CB Insights recently mapped out Toyota’s recent investments in AI and other fields:
Regular readers will recognize Nauto, an autonomous vehicle company that just got $159 million in new funding from Toyota AI and the superfund known as the SoftBank Vision Fund. Israeli-based Intuition Robotics recently raised $14 million, with TRI leading the way, for its robotic elder care assistants. It seems like an odd play for the automaker, but perhaps that’s how it’s repurposing its crash dummies. London startup SLAMcore makes more sense, as it develops visual tracking and mapping algorithms for robots and autonomous vehicles.
Searching for Early Signs of AI
Parent Company: Alphabet Inc. (aka, Google)
Fund: Gradient Ventures
Fund Total: Unknown; will invest in early-stage startups
Last month, Google officially launched its own AI-focused fund called Gradient Ventures, which will focus on early-stage startups, implying there won’t be any mega-round coming from the newly created fund. However, Gradient Ventures will be run off of Google’s balance sheet, according to TechCrunch. Its other funds, GV and Capital G, are managed separately.
The fund has a small portfolio with four startups:
- Founded in December 2013 and based in Seattle, Algorithmia raised $10.5 million in June in a Series A led by Gradient Ventures. The company provides a marketplace for algorithms and made it into our article on Artificial Intelligence (AI) as a Service and “Core AI”.
- Based in San Jose, Cogniac focuses on machine vision applications, ranging from infrastructure inspections to security threats. It received an undisclosed amount from Gradient Ventures in July. We’re told the company has absolutely, disappointingly enough, nothing to do with brandy.
- Silicon Valley-based Cape Productions provides an online platform to fly drones from any place in the world where you have a WiFi connection. The company raised an undisclosed amount of money in July, with $10 million in disclosed funding.
- Another product of Silicon Valley, Aurima is “building a multi-sensor deep-learning awareness platform” and that’s about all we know at this point in the game.
Newcomer to the Scene
Parent Company: None
Fund: Basis Set Ventures
Fund Total: $136 million; will invest in early-stage startups
Founded by former executives at DropBox and Tencent, Basis Set Ventures just popped onto the scene this summer as a new AI-focused VC fund. An SEC filing shows the company as being incorporated in, ahem, the Cayman Islands, with the intent to raise $136 million for what the company says on Medium is “an early-stage venture fund focusing on improving work productivity through artificial intelligence for white and blue collar workers”.
Despite what sounds like the makings of a thriller starring an aged and flaccid David Hasselhoff, BSV has already made a couple of investments, including to Clara Labs, one of a number of startups developing AI chatbots. BSV co-led the $7 million Series A that also included Sequoia Capital last month. BSV also participated in an undisclosed Seed round in June for Falkonry, which had raised $5.3 million earlier this year. Falkonry sells “AI in a box”, meaning it builds predictive models for equipment companies with loads of data but no way of applying it to real-world problems.
The Fund Without a Name
Parent Company: Microsoft
Fund: Microsoft Ventures AI Fund
Fund Total: Undisclosed; “inclusive growth and positive impact on society”
Sometimes it’s hard to differentiate the hype from the reality when it comes to AI startups. The same could probably be said about some AI-focused VC funds. Microsoft Ventures is certainly a legit fund by all measures, but when the company announced its “commitment” to “democratize AI” with a new fund focused on “inclusive growth and positive impact on society”, we got a case of indigestion. The new fund has no particular name, and its portfolio appears to be folded into the general Microsoft Ventures portfolio. For example, in May, the company announced investments in two AI companies—Agolo and Bonsai. But only the latter is considered part of the AI Fund Without a Name. The difference is that Bonsai meets the “inclusive growth and positive societal impact”. We assume Agolo must be part of Microsoft’s alternative plans to turn the world into a dystopian nightmare.
Anyway, here are the three startups that the Fund Without a Name is backing so far (and as far as we can tell):
- The “new” fund’s first investment went to Canada’s most well-funded AI startup, Element AI, which we highlighted in our popular Canadian startups article. The $102 million Series A in June will help Element AI sell its AI Software as a Service and boost its efforts to serve as an incubator for new AI companies in Canada.
- Founded in 2014, Silicon Valley’s Livongo is a digital health company that helps people manage chronic conditions like diabetes using a real-time meter, with lots of bells and whistles, which reads glucose levels. MV participated in a $52.5 million Series D in March for the company, which has raised a total of $143.2 million.
- Bonsai is another one of those AI as a Service companies, which we featured earlier this year. The $7.6 million Series A round in May that Microsoft helped back brought total funding to the Berkeley startup to $13.6 million.
China Delivering on AI
Parent Company: Baidu Inc.
Fund: Baidu Ventures
Fund Total: $200 million; will invest in early-stage startups
Baidu is the Chinese version of Google. And, like any other big tech company, to show you’re serious about technology you have to have an AI-focused VC fund. Enter Baidu Ventures, a $200 million fund that will also tap startups in the augmented/virtual reality space. TechCrunch reports that Baidu Ventures recently teamed up with another AI-focused VC firm, San Francisco-based Comet Labs, to share resources and expertise.
So far, Baidu Ventures has made just two investments and neither seems very AI centric. Its first foray involved a $27 million Series B to a New Zealand company called 8i which is based in Wellington. 8i focuses on creating AR-generated celebrities using a technology called volumetric capture that stitches together feeds from different cameras to produce a 3D image, and they made it into our article on how to Scan Yourself into Virtual Reality Games and Movies. 8i has also created an app that allows you to add holograms of real people and animals into your world and take photos and videos to share with friends. The second company, Falcon Computing Solutions, does something with big data but we couldn’t be troubled to dive below the industry-speak because we were watching hologram videos. It closed a $7 million Series B in May.
Streaking Through the AI Cosmos
Parent Company: None
Fund: Comet Labs
Fund Total: Unknown
Baidu Ventures naturally led us to take a closer look at Comet Labs, an AI-focused VC fund that also supports accelerator programs it calls Labs. It’s the veteran of the group, founded in 2015. It focuses on AI and robotics startups, and has about 30 companies in its portfolio. Its most recent investment was in Abundant Robotics, which we featured recently as one of six agtech robot startups. Another name familiar to us is Pluto Ai, a water tech company that uses machine learning to detect problems in utility systems before they occur.
What’s in a Name?
Parent Company: Deeplearning.ai (maybe?)
Fund: AI Fund
Fund Total: $150 million
A name with some heft in certain circles, Andrew Ng has filed the paperwork for a $150 million AI-focused VC fund. Ng certainly has the technical chops. He founded and led the Google Brain Deep Learning Project and also co-founded Coursera, where he teaches one of its most popular (and free) online courses on machine learning. He recently left his job as chief scientist at Baidu. There’s not much information about who will help back this new fund or its investment philosophy. Ng recently stood up a new website called Deeplearning.ai that will likely serve as a platform for his new ventures. We’ll stay tuned to see where this one heads.
The sudden proliferation of AI-focused VC funds seems to be part of the general craze over artificial intelligence. It does take a certain level of understanding of the technology and business ecosystem surrounding artificial intelligence to slice between the hype and the real deal. AI-focused VC funds may be in a better position to make those judgment calls, assuming they don’t drink too much of their own Kool-Aid.
Pure-play disruptive tech stocks are not only hard to find, but investing in them is risky business. That's why we created “The Nanalyze Disruptive Tech Portfolio Report,” which lists 20 disruptive tech stocks we love so much we’ve invested in them ourselves. Find out which tech stocks we love, like, and avoid in this special report, now available for all Nanalyze Premium annual subscribers.