Jul 29, 2019

The world is catching up on AI

Dion Rabouin, author of Markets
Expand chart
Data: CB Insights; Chart: Axios Visuals

Last year for the first time ever, the U.S. share of global artificial intelligence startup funding deals fell to less than half the world's total.

By the numbers: The U.S. was home to nearly 75% of all deals in 2013, data shows, but is fast losing share in the startup market — a key driver of innovation.

Why it matters: AI is a major growth force for American companies and "of paramount importance to maintaining the economic and national security of the United States" President Trump said in an executive order signed in February dubbed the "American AI Initiative."

  • However, Trump's order allocated no new federal funding toward AI research and development, only calling on federal agencies to prioritize existing funds toward AI projects.

The big picture from Axios emerging tech reporter Kaveh Waddell: The U.S. had a head start in commercializing AI, thanks to unmatched talent and eager VC money.

  • But the number of startups in the U.S. has been relatively flat since the financial crisis — in part because Big Tech quickly snaps up the most promising shoots — while AI startups in Europe and especially China have flared into prominence, driven by their governments' concerted strategic planning to dominate in AI.

What's happening: In addition to the Chinese government allocating significant spending to AI, more new companies are being started in a raft of different countries and raising equity, analysts from CB Insights tell Axios in an email.

  • In 2013, there were only around 20 AI startups in countries outside the U.S. that raised funding, data shows. In 2019, there are more than 60.

Yes, but: The total amount of funding is still tilted heavily toward the U.S. — with the exception of a handful of Chinese mega-companies like TikTok owner ByteDance, which is the top-funded AI startup in the world. The U.S. funding lead is likely to continue because of its concentration of AI experts.

  • Many U.S. startups "have graduated from the seed-funding stage and entered later stages such as expansion and pre-IPO," says Joy Dantong Ma, an analyst at the Paulson Institute. "Funding in these later stages tend to be more sizable."

ICYMI: AI startups generated their highest level of funding ever in this year's second quarter, $7.4 billion, CB Insights' data shows.

Go deeper

Updated 32 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 6,724.516 — Total deaths: 394,018 — Total recoveries — 2,996,832Map.
  2. U.S.: Total confirmed cases as of 9 p.m. ET: 1,894,753 — Total deaths: 109,042 — Total recoveries: 491,706 — Total tested: 19,231,444Map.
  3. Public health: WHCA president says White House violated social-distancing guidelines to make reporters "a prop" — Jailing practices contribute to spread.
  4. Sports: How coronavirus could reshuffle the sports calendar.
  5. Jobs: Better-than-expected jobs report boosts stock market.
  6. Media: The Athletic lays off 8% of staff, implements company-wide pay cut.

Scoop: German foreign minister to travel to Israel with warning on annexation

Heiko Maas. Photo: Michael Kappeler/picture alliance via Getty Images

German Foreign Minister Heiko Maas is expected to travel to Israel next week to warn that there will be consequences if Israeli leaders move forward with plans to annex parts of the West Bank, Israeli officials and European diplomats tell me.

Why it matters: Israeli and European officials agree that if Israel goes ahead with unilateral annexation, the EU will respond with sanctions.

Minneapolis will ban police chokeholds following George Floyd's death

A memorial for George Floyd at the site of his death in Minneapolis. Photo: Steel Brooks/Anadolu Agency via Getty Images

Minneapolis has agreed to ban the use of police chokeholds and will require nearby officers to act to stop them in the wake of George Floyd's death, AP reports.

Why it matters: The agreement between the city and the Minnesota Department of Human Rights, which has launched an investigation into Floyd's death while in police custody, will be enforceable in court.