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Artificial intelligence trends reshaping industries
and economies
State of AI
2018
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J O I N T H E C O N V E R S A T I O N O N T W I T T E R
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W H O W E A R E
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intelligence platform.
CB Insights software lets you predict, discuss,
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using data in ways that are beyond human
cognition. We are a leader in the Expert Automation
& Augmentation Software (EAAS) space.
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T R U S T E D B Y T H E W O R L D ' S L E A D I N G C O M P A N I E S
"We use CB Insights to find emerging trends
and interesting companies that might signal a shift in
technology or require us to reallocate resources."
Beti Cung, Corporate Strategy, Microsoft
The Disruption of
Financial Services
The Future of Fintech is an exclusive
gathering of the world's largest financial
institutions, best fintech startups, and
most active venture investors.
New York, NY
June 19-21, 2018
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Deepashri Varadharajan
Deepashri Varadharajan received her undergraduate degree in engineering at
Vellore Institute of Technology in India. She later studied journalism, and
received a Master's degree from the Columbia University Graduate School of
Journalism.
Before CB Insights, Deepashri worked for organizations including Al Jazeera
America, Deccan Herald, and interned at Siemens India.
Most popular analyses by Deepa:
Artificial Intelligence Trends To Watch In 2018
The State of Automation
@deepalearning | dvaradharajan@cbinsights.com
Senior Analyst & Writer (AI)
A B O U T T H E A N A L Y S T
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Contents
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15
21
27
36
New blue collar job robot
babysitters
White-collar automation
accelerates
6-figure salaries in the AI talent
wars
China vs US competition heats up
AI for X is everywhere
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45
49
55
The machine learning hype will
die
Amazon, Google, Microsoft
dominate enterprise AI
The emergence of 'capsule
networks'
AI diagnostics gets the nod from
regulators
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J O B S
New blue collar job
robot babysitters
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Manufacturing jobs are on the rise
Source: BLS
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Chinese manufacturing giant moves to Arkansas
Chinese T-shirt manufacturer Tianyuan Garments Company signed a Memorandum of
Understanding (MoU) with the Arkansas government to employ 400 workers at $14/hr at
its new garment factory in Arkansas.
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SoftWear develops "Sewbots" to
automate sewing worklines in the
manufacturing of garments and shoes.
Select Investors
CTW Venture Partners
C H I N A ' S T I A N Y U A N P A R T N E R S W I T H G E O R G I A - B A S E D S T A R T U P
Funding
$7.5M
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"the system will make one T-shirt
every 22 seconds. We will produce
800,000 T-shirts a day for Adidas
even the cheapest labor market can't
compete with us."
A U T O M A T I O N I S C H A N G I N G T H E S U P P L Y C H A I N
Tang Xinhong, chairman of Tianyuan Garments, speaking to ChinaDaily
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The number and nature of jobs will
never be the same as 2008 numbers.
L A B O R M A R K E T I S S H I F T I N G
15
J O B S
White-collar automation
accelerates
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A growing wave of Expert Automation &
Augmentation Software (EAAS)
platforms will usher in a new era of
AI-enhanced productivity.
E A A S T H R E A T E N S E N T R Y - L E V E L W H I T E C O L L A R J O B S
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The market map
highlights some of
the EAAS startups
across number of
professions
ranging from
lawyers to
journalists to
wealth managers,
and more.
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Early-stage AI deals in law
(green lines indicate investments)
AI may impact
fee structure of
law firms
AI can summarize
thousands of pages of
legal documents within
minutes while reducing
the probability of error.
This will impact the fee
structure of law firms that
charge by the hour on the
revenue side but also be a
potential cost savings as
they will be able to hire
fewer junior lawyers.
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"Most of (the) software we write today at
Google, everything, these are hand-coded
systems... Over time, these could be lone
systems, which automatically writes itself."
A I I N S O F T W A R E D E V E L O P M E N T
Sundar Pichai, Google CEO
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Machine learning removes safety net for entry-
level software developers
Early-stage deals are emerging to startups focused on AI-based
software testing, debugging, and basic frontend development.
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J O B S
6-figure salaries in the AI
talent wars
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The demand for AI talent is far
outpacing the availability of
skilled researchers.
T A L E N T & S K I L L S S H O R T A G E
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Big tech scoops
top AI talent
Google's Deepmind
Technologies reported
that "staff costs and other
related costs" accounted
for 104.8M. A quick
LinkedIn search puts the
staff number at 415.
Assuming this as team
size in 2016, and
discounting other
expenses, this puts the
average employee salary
for the team at 252,000
(around $350,000 per
annum).
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China is on a hiring spree too
$567K-$624K
https://www.liepin.com
$315K-$410K
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According to a recent Tencent report,
there are around 300,000 qualified AI
researchers. But demand is in the
millions.
T A L E N T & S K I L L S S H O R T A G E
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Top AI talent bleeds to startups
Ex-Baidu
Ex-Google
Ex-Baidu
T A L E N T W A R S H E A T U P
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G E O - P O L I T I C S
US vs China
competition heats up
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The United States is losing its global AI deal share
Equity deal share, 2013 - 2017
US global AI deal
share falls to
all-time low
The United States still
dominates globally in
terms of the number of AI
startups and total equity
deals.
But it is gradually losing
its global deal share.
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China wants to be a global AI leader
Issued by the Chinese government in July 2017
http://www.gov.cn/zhengce/content/2017-07/20/content_5211996.htm
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In some areas of AI, China is
clearly beating the US.
C H I N A R A C E S A H E A D
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China dominates global AI funding
US vs China total equity funding to startups in 2017
China surpasses
US in equity
funding
Despite a mere 9% global
deal share, China
accounted for nearly 48%
of the total funding.
To put this proportion in
perspective, in 2016,
China accounted for only
11.3% of global funding.
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Technologies fueling China's growth
Facial recognition
AI chips
C H I N A I N A I
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China invests heavily in facial recognition tech
All deals, including grants, 2013 - 2017
China advances
ambitious
surveillance
plans
Three key players here are
China-based unicorns
Megvii (dba Face++) and
SenseTime, and startup
CloudWalk (the latter a
recipient of a $301M
grant from the Guangzhou
Municipal Government.
$M
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AI-related patent publications explode in China
Based on keyword searches, 2013 - 2017
Patents reflect
China's AI R&D
efforts
Based on basic keyword
searches of title and
abstract, AI-related patent
publications in China are
surging far ahead of
patents being published in
these spaces by the US
Patent and Trademark
Office.
(Note: The patent filing process
involves a significant time-lag
before the publishing of patent
applications.)
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Cross-border AI investments on the rise
Equity deals, 2013 - 2017
Tech swapping
between
countries
increases
Despite scrutiny of
Chinese companies
seeking partnerships or
investments in the US,
there are more Chinese
investments in AI startups
in the US than vice-versa.
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B U S I N E S S
AI for X is
everywhere
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There is now AI
for weed.
DeepGreen uses
computer vision to
identify the gender and
health profile of cannabis
plants. Weedguide raised
$1.7M to use AI for
personalized weed
recommendations.
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And fish.
DeepFish in Russia is
using neural networks to
identify, well, fish. It
merges radar technology
with AI to differentiate
between fish and noise in
radar images.
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And horses.
Sweden's Hoofstep raised
VC money to bring deep
learning-based behavioral
analysis to horses.
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B U S I N E S S
The machine learning
hype will die
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The ML frenzy in numbers
1,100+
New startups
raised 1st equity since
2016
A I I S E V E R Y W H E R E
$15.2B
Equity funding in 2017
alone, a 141% jump from
the previous year
300+
Companies entered
incubators in 2017, 3x
more than 2016
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"I believe that in 2 years, no investor is
going to be explicitly looking to fund
AI-powered startups."
B U T T H E H Y P E W I L L S O O N D I E
Frank Chen, partner at a16z
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AI heats up across every industry
Equity deals, Q4'12 Q4'17
Machine learning
gets normalized
We are already seeing this
happen in many
industries.
Machine learning is
inseparable from IIoT.
Almost all cybersecurity
companies use machine
leaning to some extent
today. In addition to this,
big tech companies are
offering a suite of
machine learning
solutions to enterprises.
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Investors will get picky about startup funding
Competitive
landscape
Business model
feasibility
Robustness of
technology
M L - B A S E D C O M P A N Y ? S O W H A T ?
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B U S I N E S S
Amazon, Google,
Microsoft dominate
enterprise AI
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Investors poured $1.8B into
enterprise AI startups in 5 years.
E N T E R P R I S E A I
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Now Amazon, Microsoft, and
Google may make smaller
companies obsolete.
E N T E R P R I S E A I
48
Big tech doubles down on enterprise services
Microsoft is competing
neck and neck with AWS
with Azure cloud services.
Google released Cloud
AutoML. Customers can
bring their own data to train
the algorithms to suit their
specific needs.
AWS expanded its
enterprise AI offerings. Its
4th quarter revenue alone
was $5B.
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T E C H N O L O G Y
The emergence of
'capsule networks'
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Challenges of convolutional neural networks (CNN)
The example below shows a very basic illustration. A
CNN would identify individual features and mistake
the second image to be a face.
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Google's Geoffrey Hinton published a
research paper in 2017 that
introduces the concept of "capsule
networks".
C A P S U L E N E T W O R K S
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The promise of capsule networks
For example, these networks would more easily
identify that when features on a face are rearranged,
it is no longer a face.
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CapsNets will require less training data
With CNNs, for instance, you have to train the algorithm with images of
the same object from different angles or viewpoints for it to identify all
variations. As a result, it would require a large volume of training data
to cover all possible variations.
Image source: https://openreview.net/pdf?id=HJWLfGWRb
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CapsNets may be less prone to hacking attempts
One of the more popular examples is from a 2015 paper. As seen above,
a small change that is not readily noticeable to the human eye results in
a neural network identifying a panda as a gibbon, a type of ape, with
high confidence.
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I N D U S T R Y
AI diagnostics gets the
nod from regulators
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AI heats up across every industry
Equity deals, Q4'12 Q4'17
Healthcare AI
deals top the
chart
Healthcare is the hottest
area of AI startup
investment as our
heatmap shows.
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Market map of healthcare AI startups
Much of this
growth is fueled
by medical
imaging &
diagnostics
companies.
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The Arterys cloud computing platform was
approved for analyzing cardiac images.
Select Investors
DNA Capital, Emergent Medical Partners,
Fosun Capital, GE Ventures, NewYork
Presbyterian Hospital, Northwell Ventures,
ORI Capital, Temasek Holdings and Varian
Medical Systems
F D A A P P R O V A L
Funding
$42M
Valuation
$82M
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Strong public partnerships in AI diagnostics
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Increasingly crowded healthcare AI space
1st equity deals, 2013 - 2017
Smaller health AI
startups
undeterred by big
players
Big names Google
DeepMind, IBM, GE, and
Alibaba make this a tough
market for smaller
startups to compete in.
But this hasn't stopped
new companies from
venturing into the space.
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Deepashri Varadharajan
dvaradharajan@cbinsights.com
@deepalearning