Advances in AI are expected to benefit investors and businesses in a variety of technical and creative fields
The positive prospects for investors in the AI sector
The strong influx of early-stage funding and R&D initiatives into commercial applications of generative AI from investors and large technology companies indicates a positive outlook for the sector, with an estimated capital of US$1.4 billion in 20221 despite a challenging fundraising environment in the private capital markets. Most of this funding activity has been at the venture capital level, as investors saw opportunities to invest in companies they see as market disrupters with the potential to have a global impact as the sector expands. Representative of this is Macquarie Capital Venture Capital Group’s recent equity investment in D-ID, a generative AI company using patented deep learning technology to create digital humans for large enterprises and improve customer experience and engagement.
Major tech industry players including Adobe, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Salesforce, Spotify and UiPath are driving the commercialization of these advances in AI through their own R&D initiatives. Product offerings and capabilities include image and video editing and creation, voice simulation, 3D object and scene generation, code development, dialogue workflow, music composition and drug discovery.
Sam Shah, global head of software & services and co-head of Macquarie Capital Americas, says many of these big technology consolidators will look to complement R&D initiatives and expand their core competencies by seeking strategic M&A opportunities. These will likely be in abundance as strategic acquirers seek to bring in-house the best talent and mission-critical solutions in the field. Macquarie Capital has expanded its M&A coverage to include AI and ML, bringing software and technology expertise to the fast-growing sector.
Meanwhile, early-stage venture and growth companies will be looking for investors who can provide capital and resources to advance their technologies and provide access to a larger platform for product distribution. Investors will look to deploy capital in companies that offer end-to-end enterprise-ready AI solutions in their respective sectors. Companies that have been particularly successful in early funding rounds are developing production-ready AI and Machine Learning Operations (MLOps) tools. We’ve already started to see this game in the market, with companies like Atomwise, a tech-based pharmaceutical company using AI to streamline small molecule drug discovery, and Jasper.ai, an AI-powered digital content generator that $120 million and $140 million respectively in their latest funding rounds. “In such an emerging environment, these companies are defining and shaping the next generation of AI and are representative of some of the innovative solutions this new phase will bring to market over the next three to five years,” says Shah.