EMERGING TECH RESEARCH

Artificial Intelligence
& Machine Learning
Overview
Industry and taxonomy update with latest VC activity

REPORT PREVIEW
2023 The full report is available through
the PitchBook Platform.

Published April 10, 2023

Contents
Vertical overview 3 Institutional Research Group
Analysis
VC activity 5
Brendan Burke Senior Analyst, Emerging Technology
AI & ML landscape 6
[email protected]
AI & ML VC ecosystem market map 7 [email protected]

Segment overview 11 Data

Matthew Nacionales Data Analyst

Horizontal platforms 12

Vertical applications 17 Publishing

Autonomous machines 23 Report designed by Julia Midkiff and Joey Schaffer

AI & ML semiconductors 26 Published on April 10, 2023

Appendix 31

2023 Artificial Intelligence & Machine Learning Overview CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 2
AI & ML landscape
1 Horizontal platforms

2
$
Vertical applications

3 Semiconductors
3
4 Autonomous machines

1
2

4
2023 Artificial Intelligence & Machine Learning Overview CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 5
VC activity
2022 challenged the highly funded AI vendors that are unlikely to drive the field’s future. VC
funding for the vertical declined more than for IT overall, falling 34.9% in VC deal value to $78.0 Median AI & ML VC pre-money valuation step-up by stage
billion. The median venture growth valuation step-up declined below the overall VC median, to
1.3x, demonstrating the prevalence of flat rounds and outlying down rounds faced by leading 3.0x
vendors such as Dataiku and Noodle.ai. As with global IT, 2022 deal value exceeded 2020’s total.
Deal count also declined more than for IT, at 13.2%, as early-stage deal count regressed even as 2.6x

late-stage deal count remained high. The sector experienced deal count declines of over 50% in 2.5x
2.3x
autonomous vehicles, processor design, automation platforms, and intelligent sensors as investors
avoided hardware- and labor-intensive businesses. Consumer AI proved to be the most resilient 2.0x 2.0x
2.0x
1.8x
vertical application, declining only 20.5% in VC funding year-over-year, as consumer interest in AI 1.8x
applications emerged.
1.5x 1.7x
1.3x

VC exit count continued to decline in Q4, though deal value rebounded due to significant listings
in China. We tracked $7.0 billion in VC exit value in Q4—up from Q3, but the second-lowest value
1.0x
we have tracked since Q2 2020. Exit count has remained above pre-pandemic levels. Among tech
giants, active acquirers included Meta, Oracle, and Spotify. PE found opportunities in generative AI,
with growth equity PSG using generative copywriting startup Copywriter AI as a platform to add 0.5x

on two writing startups in Frase and Rytr, forming a new platform called Copyrytr. This platform
play gives an early look at the synergies of generative AI startups as they proliferate in different
0x
use cases. AI copywriting leader Jasper has also become an acquirer as part of the company’s
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
strategy to deliver a unified content suite across formats.
Angel and seed Early-stage VC Late-stage VC Venture growth

Source: PitchBook | Geography: Global | *As of December 31, 2022

2023 Artificial Intelligence & Machine Learning Overview CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 7
VC ACTIVITY

Q4 2022 AI & ML VC deal activity by segment* TTM AI & ML VC deal activity by segment*

601 2,273

222 798

291
48 65
186

$961.8 $2,572.2 $2,539.1 $8,027.4 $3,699.8 $9,371.6 $15,679.5 $45,821.9

AI & ML semiconductors Autonomous machines Horizontal platforms Vertical applications AI & ML semiconductors Autonomous machines Horizontal platforms Vertical applications

Deal value ($M) Deal count Deal value ($M) Deal count

Source: PitchBook | Geography: Global | *As of December 31, 2022 Source: PitchBook | Geography: Global | *As of December 31, 2022

2023 Artificial Intelligence & Machine Learning Overview CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 8
Vertical applications
Overview grid automation, geospatial analysis, heavy industry automation, IoT predictive analytics, supply
chain optimization, and telecommunications optimization.
Vertical applications in AI & ML address specific problems within industries and are not always AI • AI in IT: Includes enterprise software tools that optimize specific functions typically administered
first. Many startups in this category design a solution to an industry problem using software and by IT departments, including both back-end and front-end use cases. Product categories include
integrate AI & ML to optimize some part of their product. These solutions typically differentiate human resource automation, information security (infosec) automation, IT infrastructure
based on the quality of the dataset used to train the industry-specific model and the industry management, legal automation, property technology, sales & marketing automation, and
expertise of the data scientists identifying decision-making areas that can be enhanced by AI & ML software development tools.
models. As a result, many of these startups help automate specific functions within their industry • AI in transportation: This category includes intelligent fleet management and driver assistance.
but have limited ability to cross apply their AI & ML to other industries. It excludes autonomous vehicles.

Current subsegments include:

Industry drivers
• AI & ML in financial services: Includes technologies that embed AI & ML into existing financial Growing availability of industrial datasets: Startups can build preliminary models based on data
services via advanced analytics, process automation, robo-advisors, and self-learning programs. and frameworks from sources including Google Dataset Search, Kaggle, UCI Machine Learning
Product categories include financial chatbots, intelligent banking, lending analytics, payment Repository, Microsoft Coco, and GitHub. Governments support data sharing, as evidenced by
optimization, predictive underwriting, and robo-advisors. President Biden’s Executive Order on Enhancing Safeguards for United States Signals Intelligence
• AI in healthcare: Includes technologies that leverage AI & ML to improve medicine and the Activities. 5 This order codifies the EU-US Data Privacy Framework for secure data sharing for
provision of care. Product categories include AI-based drug discovery, clinical decision support, AI training.
genetic analytics, healthcare administration, and personal health.
• Consumer AI: Includes technologies that use AI & ML to enhance B2C business models. Product Enterprise customers are achieving ROI with AI solutions: McKinsey’s State of AI survey found
categories include AI in media & entertainment, AI & ML advertising technology, digital avatars that over 40% of AI adopters in service operations, manufacturing, human resources, risk
and gaming, e-commerce recommendation engines, education technology, intelligent price management, and sales & marketing achieved cost savings as a result of their AI projects in 2021.6
optimization, and smart retail. Only around 50% of these adopters reported cost savings the prior year.
• Industrial AI & ML: Includes technologies that automate industrial processes and unlock
industrial data to find new efficiencies. Product categories include crop maximization, energy 5: “Executive Order on Enhancing Safeguards for United States Signals Intelligence Activities,” The White House, October 7, 2022.
6: “The State of AI in 2022—and a Half Decade in Review,” McKinsey Institute, December 6, 2022.

2023 Artificial Intelligence & Machine Learning Overview CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 17
APPENDIX

AI & ML VC deal value ($M) by stage AI & ML VC deal count by stage

$140 Venture growth 8,000 Venture growth

Late-stage VC Late-stage VC
Early-stage VC Early-stage VC
$120 7,000
Angel and seed Angel and seed

6,000
$100

5,000
$80

4,000

$60

3,000

$40
2,000

$20
1,000

$0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*

Source: PitchBook | Geography: Global | *As of December 31, 2022 Source: PitchBook | Geography: Global | *As of December 31, 2022

2023 Artificial Intelligence & Machine Learning Overview CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 34
 PitchBook Data, Inc.
John Gabbert Founder, CEO

Nizar Tarhuni Vice President, Institutional Research and Editorial

Paul Condra Head of Emerging Technology Research

About PitchBook Additional research

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