The state of emerging technologies: AI and ML lead the pack

Today, technology is advancing at an incredible rate, and things that were once left to the realm of science fiction are becoming reality. Investors pay attention to times like this when technology advances significantly. So where are investors deciding where to put their money when it comes to emerging technologies?

Pitchbook looks at the technologies that the top ten percent (10%) of venture capital investors are pursuing, delves into how those investors are allocating their funds, and analyzes emerging technology indicators* (full report available for download here). . Below, we take a look at the data behind the funded startups.

First, as expected, transaction value declined in the fourth quarter of 2022, down 26% from the third quarter of the same year. The total value of the 130 deals in the fourth quarter was $3.53 billion, down from $4.83 billion in the third quarter. Although this marks the fourth consecutive quarter of decline in ETI investments, they note that “ETI deal value still accounts for 11.6% of total seed and early stage VC investments, which is above the historical average. ” points out. It’s about 10%. ” This means that investors are still interested in these emerging technologies, especially in some specific areas.

In terms of specific investment areas, biotechnology and artificial intelligence/machine learning (AI and ML) led ETI investments in Q4 2022. In the biotech sector he has investments of $455.7 million, and immediately after AI and ML he has investments of $401.9 million. Investors are still looking to invest in data technology and health and wellness technology, with $376.4 million and $292 million respectively, while the fintech sector saw $172.4 million in investments. . This is all in Q4, but if you look at the past 12 months as a whole, biotech still leads the pack, followed by Web3 and DeFi, so these are still active areas for investors.

There were several areas that saw deal numbers spike from Q3 to Q4, including e-commerce and AI and ML. In fact, AI and ML showed the highest number of transactions and his second largest investment amount in the fourth quarter. This investment in AI and ML is being driven by generative AI, which is gaining tremendous interest from investors and consumers. The buzz around this technology continues to grow and shows no signs of slowing down as consumers seem ready to adopt this technology in a variety of ways. You can read our previous blog post on the burgeoning investment in generative AI here.

Although there is currently an overall downtrend in investing, there are definitely areas where investors can expect amazing technological advances. In particular, he said, keep an eye on what happens in the AI ​​and ML space, as investors continue to bet on AI and ML as game-changing technologies.

Meanwhile, Silicon Valley Bank CEO Greg Becker said in an interview with The Information reporter Kate Clark last week at the Upfront conference in Los Angeles that venture funding is expected later this year. suggested it would get better (though it’s not all “rainbows and unicorns”). Next year, it will recover to 2018-2019 levels.

*The Emerging Tech Indicator is a quarterly review of seed and early-stage investment activity involving a limited subset of the world’s most successful VC firms, representing approximately 10% of total VC investments. The analysis provides a unique perspective on the types of technologies that top investors see as most promising, while also tracking how actively investors are making capital allocation decisions.”


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