Feb 6, 2024 - News

Boston's AI industry brings in billions, but not where you think

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Illustration: Brendan Lynch/Axios

Despite fierce competition nationwide, the Boston tech scene is likely to solidify its lead in the AI industry, a new report says.

Why it matters: AI is expected to disrupt every aspect of our society like the internet did, and investors are already pumping billions in funding into the sector — and not just generative AI technology like ChatGPT.

What's happening: Boston-area companies are at the forefront of developing new AI and managing data for AI to use, per a report published last week by Value Creation Labs.

  • DataRobot and other local companies are leading on "intelligent data management" and automation.
  • Other companies are using AI to streamline their work in cybersecurity, life sciences and health care.

By the numbers: When it comes to AI-related funding since 2019, the Boston area ranks third, behind Silicon Valley and New York.

  • Venture capital activity in AI and machine learning in New England peaked in 2021 with nearly $5.9 billion invested across 257 deals, per the report, which cites Pitchbook data.
  • In 2023, the region reported $2.3 billion in investments across 213 deals.

Yes, but: Boston isn't the leader in generative AI. Most companies in that sector are headquartered in the Bay Area.

  • The Boston area is home to a few.
  • VCL predicts Boston's footprint on the generative AI market will grow this year.

The bottom line: Boston's stronghold in tech and health-related industries, and its proximity to top universities and hospitals, means it's poised to make headway in the lesser-known areas of AI, per the report.

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