September 24, 2018
China is beating the US in AI and Europe’s AI experts are challenging both US and China, but a new contender for AI leadership is rapidly emerging. The startup nation of Israel is targeting today’s hottest tech sector by deploying its expertise in cutting-edge data analysis, software and hardware engineering talent, and proven entrepreneurial skills.
According to analyst Daniel Singer, Israeli AI startups (using technologies such as machine learning, deep learning, computer vision, natural language processing, robotics, and speech recognition) have raised close to $2 billion in 2017, an increase of 70% over 2016, and have already raised $1.5 billion this year. An average of 140 startups have been created annually over the last 5 years and there are now over 950 active Israeli startups utilizing or developing AI technologies. (See here for an interactive version of the infographic above).
It’s good to be a member of this exclusive club. Over the last five years, AI startup exits averaged $121 million per deal, selling for 5.6 times their total funding at the date of exit. This multiple has climbed to 8.3 times so far this year. And there are notable success stories—of which VC dreams are made of—such as Intel’s $15.3 billion acquisition of Mobileye and Salesforce’s more than $800 million acquisition of Datorama.
“What makes AI really hot now, is that there are hundreds of new markets and use cases that have recently been opened for disruption due to the advances in AI and data science,” says Shuly Galili, cofounding partner at UpWest Labs. “Most Israeli entrepreneurs have strong military background which means that on average they have more hands-on experience working with AI, image processing, data science, etc. than entrepreneurs from other countries.”
Adds Sian Goldofsky, Senior Analyst at OurCrowd, a leading equity crowdfunding platform investing in startups worldwide: “Access to AI talent is huge in Israel, especially in applications of image recognition and natural language processing but also in other AI-related applications.”