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The Actuary The magazine of the Institute & Faculty of Actuaries

AI drives strong growth in venture capital investment

Venture capital (VC) investment worldwide increased from $46bn (£32.4bn) in the final quarter of last year to $49.3bn in the first three months of 2018, according to a report from KPMG.

Boom in AI investment ©Shutterstock
Boom in AI investment ©Shutterstock

This is just shy of the global record for a single quarter, and was largely thanks to US investment hitting an all-time high of $28.2bn across 1,693 deals, including three transactions worth more than $1bn.

KPMG said this is expected to continue into the second quarter of 2018, with investors increasingly targeting artificial intelligence (AI), autotech and healthtech companies.

“AI will continue to be a big bet for VC investors across regions because of its broad applicability across sectors and industries,” KPMG Somekh Chaikin head of technology, Arik Speiler, said.

“Particularly in the healthcare space. AI has the potential to foster an entirely new model for providing healthcare, although in the short-term it will primarily be used as a mechanism to supplement existing services.”

Europe experienced $5.2bn of VC investment in the first quarter of this year, which remains high against historical norms, and is the fourth largest amount on record.

Mega-deals continued to shape the Asian market, with Singapore and Indonesia each recording one transaction worth more than $1bn, while China experienced several valued more than $100m.

The report also shows that corporate participation in global VC deals set a record for the second straight quarter, rising from 18.5% in the final three months of 2017 to 21%.

The ride-hailing industry attracted massive VC investment in the last quarter, accounting for four of five largest deals, with the other transaction involving an electric car manufacturer.

KPMG said that investments in blockchain have also been popular recently, with interest growing outside the US and UK, and expanding beyond digital currencies to areas like payment and remittances.

“There was a significant increase in discussions, particularly among corporates, as to the ability to use blockchain technologies in both supply chain and logistics,” KPMG said.

“The market for blockchain is well positioned to continue to mature and expand, with progress beyond use cases expected by the end of 2018.”

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